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Highlights

What GAO Found

The COVID-19 pandemic has resulted in catastrophic loss of life and substantial damage to the global economy, stability, and security. According to federal data, the U.S. had an average of 116,000 new COVID-19 cases per day from November 1 through November 12, 2020. Between January 2020 and October 2020, at least 237,000 more deaths occurred from all causes, including COVID-19, than would normally be expected, according to data from the Centers for Disease Control and Prevention (CDC).

Further, while the economy has improved since July 2020, many people remain unemployed, including both those temporarily laid off and those who have permanently lost their job (see figure). Also, more households have become seriously delinquent on mortgage payments during the pandemic. In addition, GAO’s review of academic studies suggests the pandemic will likely remain a significant obstacle to more robust economic activity.

Number of Unemployed Workers Permanently Losing Jobs and on Temporary Layoff, January 2019 through October 2020

In response to the pandemic and its effects, Congress and the administration have taken a series of actions to protect the health and well-being of Americans. However, as the end of 2020 approaches, urgent actions are needed to help ensure an effective federal response on a range of public health and economic issues.

Medical Supplies

While the Department of Health and Human Services (HHS) and the Federal Emergency Management Agency (FEMA) have made numerous efforts to mitigate supply shortages and expand the medical supply chain, shortages of certain supplies persist. In September 2020, GAO reported that ongoing constraints with the availability of certain types of personal protective equipment (PPE) and testing supplies remain due to a supply chain with limited domestic production and high global demand. In October 2020, GAO surveyed public health and emergency management officials from all states, the District of Columbia, and U.S. territories (hereafter states) and found the following:
  • Testing supplies. Most states reported no shortages of swabs or transport media, but about one-third to one-half reported shortages in other types of testing supplies (see figure).

State-Reported Testing Supply Shortages, as of October 2020

GAO surveyed officials in the 50 states; Washington, D.C.; and the five U.S. territories and received responses from 47 of the 56 locations, representing 41 states; Washington, D.C.; and all five territories. Not all states responded to every question.
  • PPE. The majority of states that responded were mainly able to fulfill requests for supplies from organizations and entities within their states. However, availability constraints continue with certain PPE, such as nitrile gloves.
  • Supplies for future vaccine needs. About one-third of states that responded stated that they were “greatly” or “completely” concerned about having sufficient vaccine-related supplies to administer COVID-19 vaccines. An additional 21 states indicated that they were moderately concerned.

In September 2020, GAO recommended that HHS, in coordination with FEMA, should
  • further develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate supply chain shortages for the remainder of the pandemic;
  • immediately document roles and responsibilities for supply chain management functions transitioning to HHS, including continued support from other federal partners, to ensure sufficient resources exist to sustain and make the necessary progress in stabilizing the supply chain; and
  • devise interim solutions, such as systems and guidance and dissemination of best practices, to help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the pandemic response.

HHS and the Department of Homeland Security disagreed with these recommendations, noting, among other things, the work that they had done to manage the medical supply chain and increase supply availability. In November 2020, HHS repeated its disagreement with GAO’s recommendations and noted its efforts to meet the needs of states.

In light of the surge in COVID-19 cases, along with reported shortages, including GAO’s nationwide survey findings, GAO underscores the critical imperative for HHS and FEMA to implement GAO’s September 2020 recommendations.

Vaccines and Therapeutics

In a recent GAO report (GAO-21-207), GAO found that there has been significant federal investment to accelerate vaccine and therapeutic development, such as through Operation Warp Speed, a partnership between the Department of Defense and HHS that aims to accelerate the development, manufacturing, and distribution of COVID-19 vaccines and therapeutics. Separately, Emergency Use Authorizations (EUA), which allow for the emergency use of medical products without Food and Drug Administration (FDA) approval or licensure provided certain statutory criteria are met, have also been used for therapeutics. As of November 9, 2020, FDA had made four therapeutics available to treat COVID-19 through EUAs. In that report, GAO recommended that FDA identify ways to uniformly disclose information from its scientific review of safety and effectiveness data when issuing EUAs for therapeutics and vaccines. By doing so, FDA could help improve the transparency of, and ensure public trust in, its EUA decisions. HHS neither agreed nor disagreed with the recommendation, but said it shared GAO’s goal of transparency.

COVID-19 Testing Guidance

HHS and its component agencies have taken several key actions to document a federal COVID-19 testing strategy and provide testing-related agency guidance. However, this guidance has not always been transparent, raising the risk of confusion and eroding trust in government. In particular, while it is expected that guidance will change as new information about the novel virus evolves, frequent changes to general CDC testing guidelines have not always been communicated with a scientific explanation. GAO recommends that HHS ensure that CDC clearly discloses the scientific rationale for any change to testing guidelines at the time the change is made. HHS concurred with this recommendation.

Types of COVID-19 Testing Approaches

Nursing Home Care

In September 2020, the Coronavirus Commission on Safety and Quality in Nursing Homes (established by the Centers for Medicare & Medicaid Services (CMS) in June 2020) made 27 recommendations to CMS on topics such as testing, PPE, and visitation. CMS released a response to the commission that broadly outlined the actions it has taken to date, but it has not fully addressed the commission’s recommendations or provided an implementation plan to track and report progress toward implementing them.

While CMS is not obligated to implement all of the commission’s recommendations, the agency has not indicated any areas where it does not plan to take action. GAO recommends that CMS quickly develop a plan that further details how it intends to respond to and implement, as appropriate, the commission’s recommendations. HHS neither agreed nor disagreed with this recommendation and said it would refer to and act upon the commission’s recommendations, as appropriate.

In addition, the Department of Veterans Affairs (VA) partners with state governments to provide nursing home care to more than 20,000 veterans in over 150 state veterans homes. In March 2020, VA instructed its contractor to stop in-person inspections due to concerns about COVID-19. As of September 2020, these inspections had not resumed, leaving veterans at risk of receiving poor quality care. Additionally, VA does not collect timely data on the number of COVID-19 cases and deaths occurring at each state veterans home, hindering its ability to monitor and take steps to mitigate the spread of COVID-19 in these homes. GAO recommends that VA (1) develop a plan to resume inspections of state veterans homes, which may include using in-person, a mix of virtual and in-person, or fully virtual inspections, and (2) collect timely data on COVID-19 cases and deaths in each state veterans home. VA concurred with both recommendations.

Economic Impact Payments

The CARES Act included economic impact payments (EIP) for eligible individuals to address financial stress due to the pandemic. As of September 30, 2020, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) had disbursed over 165.8 million payments to individuals, totaling $274.7 billion. According to IRS data, more than 26 million non-filers—individuals who do not normally file a tax return and may be hard to reach—received a payment (see figure). However, everyone that was supposed to receive a payment was not reached. Starting in September 2020, IRS sent notices to nearly 9 million individuals who had not yet received an EIP.

Number of Filers and Non-Filers Issued an Economic Impact Payment, as of September 30, 2020

Treasury and IRS officials did not plan to track and analyze the outcomes of their EIP notice mailing effort until 2021. The lack of timely analysis deprives Treasury and IRS of data they could use to assess the effectiveness of their notice strategy and redirect resources as needed to other outreach and communication efforts. GAO recommends that Treasury, in coordination with IRS, should begin tracking and publicly reporting the number of individuals who were mailed an EIP notification letter and filed for and received an EIP, and use that information to inform ongoing outreach and communications efforts. Treasury agreed with this recommendation.

Unemployment Insurance

The CARES Act created three federally funded temporary programs for unemployment insurance (UI) that expanded benefit eligibility and enhanced benefits. In its weekly news releases, the Department of Labor (DOL) publishes the number of weeks of unemployment benefits claimed by individuals in each state during the period and reports the total count as the number of people claiming benefits nationwide. DOL officials told GAO that they have traditionally used this number as a proxy for the number of individuals claiming benefits because they were closely related. However, the number of claims has not been an accurate estimate of the number of individuals claiming benefits during the pandemic because of backlogs in processing a historic volume of claims, among other data issues.

Without an accurate accounting of the number of individuals who are relying on these benefits in as close to real time as possible, policymakers may be challenged to respond to the crisis at hand. GAO recommends that DOL (1) revise its weekly news releases to clarify that in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits, and (2) pursue options to report the actual number of distinct individuals claiming benefits, such as by collecting these already available data from states. DOL agreed with the recommendation to revise its weekly news releases, and partially agreed with the recommendation to pursue options to report the actual number of distinct individuals claiming benefits.

Tax Relief for Businesses

To provide liquidity to businesses during the pandemic, the CARES Act included tax measures to help businesses receive cash refunds or other reductions to tax obligations. Some taxpayers need to file an amended income tax return to take advantage of these provisions; at the same time, IRS faces an increase in mail and paper processing delays due to the pandemic, which may delay the timely processing of this paperwork and issuance of these refunds. GAO recommends that IRS update its form instructions to include information on its electronic filing capability for tax year 2019. IRS agreed with this recommendation.

Program Integrity

Although the extent and significance of improper payments associated with COVID-19 relief funds have not yet been determined, the impact of these improper payments, including those that are the result of fraud, could be substantial. For example, numerous individuals are facing federal charges related to attempting to defraud the Paycheck Protection Program (PPP), UI program, or other federal programs, and many more investigations are underway. To address the risk of improper payments due to fraud and other causes, GAO previously recommended the following:
  • The Small Business Administration (SBA) should develop and implement plans to identify and respond to risks in the PPP to ensure program integrity, achieve program effectiveness, and address potential fraud.
  • The Office of Management and Budget (OMB), in consultation with Treasury, should issue timely guidance for auditing new and existing COVID-19-related programs, including Coronavirus Relief Fund payments, as soon as possible. Audits of entities that receive federal funds are critical to the federal government’s ability to help safeguard those funds. Also, Congress should amend the Social Security Act to explicitly allow the Social Security Administration to share its full death data with Treasury for data matching to prevent payments to ineligible individuals.

GAO maintains that implementing these recommendations fully is critically important in order to protect federal funds from improper payments resulting from fraud and other risks.

In this report, GAO also identifies new concerns about the timely reporting of improper payments for COVID-19 programs. The COVID-19 relief laws appropriated over a trillion dollars that may be spent through newly established programs to fund response and recovery efforts, such as SBA’s PPP. However, unlike the supplemental appropriations acts that provided for disaster relief related to the 2017 hurricanes and California wildfires, the COVID-19 relief laws did not require agencies to deem programs receiving these relief funds that expend more than a threshold amount as "susceptible to significant improper payments." In addition, based on OMB guidance, improper payment estimates associated with new COVID-19 programs established in March 2020 may not be reported until November 2022, in some instances. GAO is making two recommendations:
  • OMB should develop and issue guidance directing agencies to include COVID-19 relief funding with associated key risks, such as changes to existing program eligibility rules, as part of their improper payment estimation methodologies, especially for existing programs that received COVID-19 relief funding.
  • SBA should expeditiously estimate improper payments and report estimates and error rates for PPP due to concerns about the possibility that improper payments, including those resulting from fraudulent activity, could be widespread.

GAO is also suggesting that Congress consider, in any future legislation appropriating COVID-19 relief funds, designating all executive agency programs and activities making more than $100 million in payments from COVID-19 relief funds as “susceptible to significant improper payments.”

Aviation Assistance and Preparedness

GAO identified concerns about efforts to monitor CARES Act financial assistance to the aviation sector. Treasury’s Payroll Support Program (PSP) provides $32 billion in payroll support payments and loans to help the aviation industry retain its employees. While recipients have begun submitting required compliance reports, Treasury has not yet finalized a monitoring system to identify and respond to the risk of noncompliance with PSP agreement terms, potentially hindering its ability to detect program misuse in a timely manner. GAO is recommending that Treasury finish developing and implement a compliance monitoring plan that identifies and responds to risks in the PSP. Treasury neither agreed nor disagreed with this recommendation, but committed to reviewing additional measures that may further enhance its compliance monitoring and ensure that PSP funds are used as intended.

In June 2020, GAO suggested that Congress take legislative action to require the Secretary of Transportation to work with relevant agencies, such as HHS, the Department of Homeland Security, and other stakeholders, to develop a national aviation-preparedness plan to limit the spread of communicable disease threats and minimize travel and trade impacts. GAO originally made this recommendation to the Department of Transportation in December 2015. GAO urges Congress to take swift action to require such a plan, without which the U.S. will not be as prepared to minimize and quickly respond to ongoing and future communicable disease events.

Why GAO Did This Study

As of November 12, 2020, the U.S. had over 10.3 million cumulative reported cases of COVID-19 and about 224,000 reported deaths, according to federal agencies. The country also continues to experience serious economic repercussions.

Four relief laws, including the CARES Act, were enacted as of November 2020 to provide appropriations to address the public health and economic threats posed by COVID-19. As of September 30, 2020, of the $2.6 trillion appropriated by these acts, the federal government had obligated a total of $1.8 trillion and expended $1.6 trillion of the COVID-19 relief funds, as reported by federal agencies.

The CARES Act included a provision for GAO to report on its ongoing monitoring and oversight efforts related to the COVID-19 pandemic. This report examines the federal government’s continued efforts to respond to and recover from the COVID-19 pandemic.

GAO reviewed data, documents, and guidance from federal agencies about their activities and interviewed federal and state officials. GAO also sent a survey to public health and emergency management officials in the 50 states, Washington, D.C., and the five U.S. territories regarding medical supplies.

What GAO Recommends

GAO is making 11 new recommendations for agencies that are detailed in this Highlights and in the report. GAO is also raising one matter for congressional consideration.

Recommendations

Matters for Congressional Consideration

NumberMatter
1

To hold agencies accountable and increase transparency, Congress should consider, in any future legislation appropriating COVID-19 relief funds, designating all executive agency programs and activities making more than $100 million in payments from COVID-19 relief funds as “susceptible to significant improper payments” for purposes of 31 U.S.C. § 3352.

Recommendations for Executive Action

Recommendations for Executive Action

We are making a total of 11 recommendations to federal agencies:
NumberAgencyRecommendation
1Department of Health and Human Services

The Secretary of Health and Human Services should ensure that the Director of the Centers for Disease Control and Prevention clearly discloses the scientific rationale for any change to testing guidelines at the time the change is made. (Recommendation 1)
2Department of Health and Human Services : Centers for Medicare and Medicaid Services

The Administrator of the Centers for Medicare & Medicaid Services should quickly develop a plan that further details how the agency intends to respond to and implement, as appropriate, the 27 recommendations in the final report of the Coronavirus Commission on Safety and Quality in Nursing Homes, which the Centers for Medicare & Medicaid Services released on September 16, 2020. Such a plan should include milestones that allow the agency to track and report on the status of each recommendation; identify actions taken and planned, including areas where the Centers for Medicare & Medicaid Services determined not to take action; and identify areas where the agency could coordinate with other federal and nonfederal entities. (Recommendation 2)
3Department of Veterans Affairs : Office of the Under Secretary for Health

The Department of Veterans Affairs Under Secretary for Health should develop a plan to ensure inspections of state veterans homes occur during the COVID-19 pandemic—which may include using in-person, a mix of virtual and in-person, or fully virtual inspections. (Recommendation 3)
4Department of Veterans Affairs : Office of the Under Secretary for Health

The Department of Veterans Affairs Under Secretary for Health should collect timely data on COVID-19 cases and deaths in each state veterans home, which may include using data already collected by the Centers for Medicare & Medicaid Services. (Recommendation 4)
5Department of the Treasury

The Secretary of the Treasury, in coordination with the Commissioner of Internal Revenue, should begin tracking and publicly reporting the number of individuals who were mailed an economic impact payment notification letter and subsequently filed for and received an economic impact payment, and use that information to inform ongoing outreach and communications efforts. (Recommendation 5)
6Department of the Treasury : Internal Revenue Service

The Commissioner of Internal Revenue should update the Form 1040-X instructions to include information on the electronic filing capability for tax year 2019. (Recommendation 6)
7Department of Labor

The Secretary of Labor should ensure the Office of Unemployment Insurance revises its weekly news releases to clarify that in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits. (Recommendation 7)
8Department of Labor

The Secretary of Labor should ensure the Office of Unemployment Insurance pursues options to report the actual number of distinct individuals claiming benefits, such as by collecting these already available data from states, starting from January 2020 onward. (Recommendation 8)
9Executive Office of the President : Office of Management and Budget

The Director of the Office of Management and Budget should develop and issue guidance directing agencies to include COVID-19 relief funding with associated key risks, such as provisions contained in the CARES Act and other relief legislation that potentially increase the risk of improper payments or changes to existing program eligibility rules, as part of their improper payment estimation methodologies. This should especially be required for already existing federal programs that received COVID-19 relief funding. (Recommendation 9)
10Small Business Administration

The Administrator of the Small Business Administration should expeditiously estimate improper payments and report estimates and error rates for the Paycheck Protection Program due to concerns about the possibility that improper payments, including those resulting from fraudulent activity, could be widespread. (Recommendation 10)
11Department of the Treasury

The Secretary of the Treasury should finish developing and implement a compliance monitoring plan that identifies and responds to risks in the Payroll Support Program to ensure program integrity and address potential fraud, including the use of funds for purposes other than for the continuation of employee wages, salaries, and benefits. (Recommendation 11)
View recommendation(s) status

Introduction 


Congressional Committees

The Coronavirus Disease 2019 (COVID-19) pandemic has resulted in catastrophic loss of life and substantial damage to the global economy, stability, and security. Worldwide, as of November 12, 2020, there were about 51,548,000 cumulative reported cases and 1,276,000 reported deaths due to COVID-19; within the U.S., there were about 10,314,000 cumulative reported cases and 224,000 reported deaths.[1]

Following a downward trend in August and early September, the number of COVID-19 cases began to increase again in mid-September. By November 1–12, 2020, reported new COVID-19 cases per day had peaked at about 116,000, on average—higher than at any other previous time. Between October 16 and November 12, 2020, reported COVID-19 cases per day, on average, increased in 49 states and jurisdictions and held steady in three states.[2]

During this most recent spike in cases, some states have taken measures to prevent their health care systems from being overwhelmed. For example, the Wisconsin Department of Health Services opened an alternate care facility at the Wisconsin State Fair Park near Milwaukee on October 14, 2020. This facility is intended to serve as overflow for hospitals across the state and supports patients who are not severely ill but require continued medical support. In addition, the Acting Secretary of the New Mexico Department of Health issued an order, beginning November 16, 2020, to close non-essential businesses, prohibit indoor or outdoor dining at food and beverage establishments, and restrict occupancy at essential retail establishments to the lesser of 25 percent of maximum occupancy or 75 customers, among other restrictions.[3]

The country also continues to experience serious economic repercussions and turmoil as a result of the pandemic. As of October 2020, there were 11 million unemployed individuals, compared to nearly 5.9 million individuals at the beginning of the calendar year.[4]

In response to this unprecedented global crisis, Congress and the administration have taken a series of actions to protect the health and well-being of Americans. Notably, in March 2020, Congress passed, and the President signed into law, the CARES Act, which provided over $2 trillion in emergency assistance and health care response for individuals, families, and businesses affected by COVID-19.[5]

The CARES Act includes a provision for us to conduct monitoring and oversight of the federal government’s efforts to prepare for, respond to, and recover from the COVID-19 pandemic.[6] We are to report on, among other things, the effect of the pandemic on public health, the economy, and public and private institutions. To date, we have issued four reports in response to this provision, and made 20 recommendations and raised three matters for congressional consideration to improve the federal government’s response efforts.[7]

This report examines the federal government’s continued efforts to respond to and recover from the COVID-19 pandemic, and makes 11 new recommendations to federal agencies and raises one new matter for congressional consideration. Areas covered include medical supply shortages, COVID-19 testing, COVID-19 vaccines and therapeutics, nursing home care, assistance to individuals and businesses, and program integrity. This report includes 44 enclosures about a range of federal programs and activities across government, including the status of health care and economic indicators that could help monitor the nation’s response to and recovery from the COVID-19 pandemic, as well as its preparedness for future outbreaks (see app. I). Figure 1 lists these enclosures by topic area and highlights those with recommendations.

Figure 1: Report Enclosures by Topic Area

Given the government-wide scope of this report, we undertook a variety of methodologies to complete our work, including examining a wide range of data sources and conducting interviews with federal and state agencies and other entities.[8] We examined federal laws, agency documents and guidance, and published reports and research papers. In each enclosure we include a summary of the methodology specific to the work conducted.

See appendix II for a list of ongoing GAO work related to COVID-19 and appendix III for the status of recommendations made in our June and September 2020 CARES Act reports and in a November 2020 report on vaccines and therapeutics.

A draft of this report was provided to agencies for comment. Summaries of those comments and our response have been included in each enclosure. General comments provided by agencies are reproduced in appendixes IV–XI.

We conducted this performance audit from May 2020 to November 2020 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Background 


Timeline of Key Congressional and Administrative Actions

In response to the far-reaching public health and economic crisis, Congress and the administration have taken a series of actions. Figure 2 shows selected federal actions taken from January through November 2020.

Figure 2: Selected Federal Actions That Congress and the Administration Have Taken Related to COVID-19, as of November 2020

Note: The selected federal actions included in this figure are examples of the types of COVID-19-related actions taken by the Congress and the administration. The list is not all-inclusive. Additional federal actions, such as the enactment of legislation providing limited and targeted relief to certain individuals and presidential actions authorizing federal support for states and individuals, also occurred during this time frame.
aThe Secretary of Health and Human Services may declare a public health emergency if the Secretary determines that (1) a disease or disorder presents a public health emergency or (2) a public health emergency, including significant outbreaks of infectious disease or bioterrorist attacks, otherwise exists. 42 U.S.C. § 247d.
bThe Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 provided $7.8 billion to agencies for health emergency prevention, preparedness, and response activities related to COVID-19, with HHS appropriated a majority of the funds. Pub. L. No. 116-123, 134 Stat. 146 (2020).
cA declaration under the National Emergencies Act authorizes the President to activate existing emergency authorities in other statutes, and the President must cite the authorities being exercised. 50 U.S.C. § 1621. A governor may request an emergency declaration under the Stafford Act if the situation is of such severity and magnitude that effective response is beyond the capabilities of the state and the affected local governments, and federal assistance is necessary. 42 U.S.C. § 5191. According to the Federal Emergency Management Agency, the President declared a nationwide emergency pursuant to 42 U.S.C. § 5191(b) to avoid governors needing to request individual emergency declarations.
dThe Families First Coronavirus Response Act provided supplemental appropriations for nutrition assistance programs and public health services and authorized the Internal Revenue Service to provide tax credits for paid emergency sick leave and expanded family medical leave that the act requires certain employers to provide. In addition, the act provided states with flexibility to temporarily modify provisions of their unemployment insurance laws and policies related to certain eligibility requirements and provided additional federal financial support to the states. Pub. L. No. 116-127, 134 Stat. 178 (2020).
eThe Defense Production Act gives the President broad authority to mobilize domestic industry in service of national defense (including programs for certain military activities, homeland security, stockpiling, space, and emergency preparedness activities under the Stafford Act, among other things). 50 U.S.C. § 4501 et seq.
fThe CARES Act provided supplemental appropriations for federal agencies to respond to COVID-19. In addition, it also funded various loans, grants, and other forms of assistance for businesses, industries, states, local governments, and hospitals; provided tax rebates for certain individuals; temporarily expanded unemployment benefits; and suspended payments and interest on federal student loans. Pub. L. No. 116-136, 134 Stat 281 (2020).
gThe Paycheck Protection Program and Health Care Enhancement Act provided additional appropriations for small business loans, grants to health care providers, and COVID-19 testing. Pub. L. No. 116-139, 134 Stat. 620 (2020).
hThe Paycheck Protection Program Flexibility Act of 2020 expanded the amount of time Paycheck Protection Program borrowers have to use program funds and modified several key program components, such as forgiveness eligibility criteria and limits on the use of funds for nonpayroll costs. Pub. L. No. 116-142, 134 Stat. 641.
iThe Secretary of Health and Human Services previously announced an extension of the public health emergency on July 23, 2020.

Federal COVID-19 Funding and Spending

As of September 30, 2020, about $2.6 trillion had been appropriated to fund response and recovery efforts for—as well as to mitigate the public health, economic, and homeland security effects of—COVID-19.[9] As of September 30, 2020, the most recent date for which government-wide information was available at the time of our analysis, the federal government had obligated a total of $1.8 trillion and expended $1.6 trillion of the COVID-19 relief funds as reported by federal agencies to the Department of the Treasury’s (Treasury) Governmentwide Treasury Account Symbol Adjusted Trial Balance System (GTAS).[10]

The Business Loan Programs, Economic Stabilization and Assistance to Distressed Sectors programs, unemployment insurance, economic impact payments, the Public Health and Social Services Emergency Fund, and the Coronavirus Relief Fund represent $2.2 trillion, or 85 percent, of the total amounts appropriated.[11] For these six largest spending areas, agencies reported obligations totaling $1.5 trillion and expenditures totaling $1.4 trillion as of September 30, 2020. Table 1 provides additional details on government-wide COVID-19 relief funds, including the six largest spending areas, appropriations, obligations, and expenditures.[12]
Table 1: COVID-19 Relief Appropriations, Obligations, and Expenditures, as of September 30, 2020

Major spending area

Total appropriationsa
($ billions)

Total obligationsb
($ billions)

Total expendituresb
($ billions)

Business Loan Programs
(Small Business Administration)

687.3

540.1

533.7c

Economic Stabilization and Assistance to Distressed Sectors
(Department of the Treasury)

500.0

31.8

19.3c

Unemployment Insurance
(Department of Labor)

394.3

358.0

345.5

Economic Impact Payments
(Department of the Treasury)

282.0

274.7

274.7

Public Health and Social Services Emergency Fund
(Department of Health and Human Services)

231.7

141.7

108.1

Coronavirus Relief Fund
(Department of the Treasury)

150.0

150.0

149.5

Other Areas

388.3

294.1

191.4

Totald

2,633.6

1,790.4

1,622.1
Source: GAO analysis of data from the Department of the Treasury and applicable agencies. | GAO-21-191

aCOVID-19 relief appropriations reflect amounts appropriated under the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146; Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 281 (2020); and Paycheck Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020). These data are based on appropriations warrant information provided by the Department of the Treasury as of September 30, 2020. These amounts could increase in the future for programs with indefinite appropriations, which are appropriations that, at the time of enactment, are for an unspecified amount. In addition, this table does not represent transfers of funds that federal agencies may make between appropriation accounts or transfers of funds they may make to other agencies.
bObligation and expenditure data are based on data reported by applicable agencies.
cThese expenditures relate to the loan subsidy costs (the loan’s estimated long-term costs to the United States government).
dThe sum of amounts may not agree due to rounding.

Executive Summary 

Overview

COVID-19 continues to take a devastating toll on the U.S. According to federal data, the U.S. had about 10,314,000 cumulative reported cases and 224,000 reported deaths as of November 12, 2020. According to data from CDC’s National Center for Health Statistics, at least 237,000 more deaths occurred from all causes (COVID-19 and other causes) than would be normally expected between January and October 2020, highlighting the effect of the pandemic on U.S. mortality (see fig. 3).[13] Further, preliminary research suggests that individuals who have had COVID-19, including those who have been hospitalized, may suffer long-term health outcomes, such as heart, brain, or lung abnormalities.

Figure 3: Higher-Than-Expected Weekly Mortality, January to October 2020

Note: The figure shows the number of deaths from all causes in a given week through October 10, 2020, reported in the U.S. that exceeded the upper bound threshold of expected deaths calculated by CDC’s National Center for Health Statistics on the basis of variation in mortality experienced in prior years. See CDC’s National Center for Health Statistics webpage on excess deaths for further details on how CDC estimates this upper bound threshold: https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm, accessed on November 9, 2020. The number of deaths in recent weeks should be interpreted cautiously as this figure relies on provisional data that are generally less complete.

While the national economy has improved since July 2020, employment remains substantially lower than before the pandemic. Among the unemployed, the number of individuals on temporary layoff decreased considerably from 18.1 million in April 2020 to 3.2 million in October 2020, but the number of unemployed individuals permanently losing jobs increased from 2.0 million in April 2020 to 3.7 million in October 2020 (see fig. 4). Additionally, our review of academic studies suggests that the pandemic will likely remain a significant obstacle to more robust economic activity. These studies consistently found that a decline in consumer demand related to COVID-19 concerns played a large role in reducing economic activity during the initial stages of the pandemic. We found some evidence based on these studies that economic activity tended to drop more significantly when the number of local COVID-19 cases and deaths increased. Our review of these studies also suggests that the initial reopening of nonessential businesses and lifting of stay-at-home orders likely had only a small effect on economic activity.

Figure 4: Number of Unemployed Workers Permanently Losing Jobs and on Temporary Layoff, January 2019 through October 2020

Note: The total number of workers losing jobs excludes individuals who completed temporary jobs but were not on "temporary layoff,” defined as people who have been given a date to return to work or who expect to return to work within 6 months.

To date, we have made 20 recommendations and raised three matters for congressional consideration to improve the federal government’s response efforts.[14] Most recently, our November 17, 2020, report on COVID-19 vaccines and therapeutics included a recommendation for the Food and Drug Administration (FDA) to uniformly disclose information from its review of safety and effectiveness data to the public when issuing emergency use authorizations for therapeutics and vaccines.

In this report, we are making 11 new recommendations and raising one matter for congressional consideration to address additional areas where significant challenges or risks remain or where the federal government’s response efforts could be improved. Below we provide details on our new and previous recommendations and matters for congressional consideration in areas throughout the federal government.

Medical Supply Shortages

The U.S. continues to face shortages of personal protective equipment (PPE), testing supplies, and other medical supplies needed for the COVID-19 pandemic. In September 2020, we reported on plans by the Department of Health and Human Services (HHS) to restructure the Strategic National Stockpile (SNS), including efforts to build a 90-day supply of certain key items. We also reported on progress HHS has made in meeting its goal of building a 90-day supply to prepare for potential surges in COVID-19 cases, and plans to add some materials, such as testing supplies, that had not been held in the stockpile prior to COVID-19. However, the continued need for supplies by state, tribal, and territorial governments, as well as point-of-care providers, such as nursing homes, combined with continued supply chain constraints may present challenges to HHS in achieving its goal of building a 90-day supply by the end of 2020.

Our October 2020 survey of senior state and territorial health and emergency management officials found that states and territories continue to report limitations in the availability of certain medical supplies, such as nitrile gloves and reagents used for COVID-19 testing. From October 10 through October 21, 2020, we fielded a survey to senior public health and emergency management officials in the 50 states; Washington, D.C.; and the five U.S. territories to gain their perspectives on the availability of PPE, testing, and vaccine administration supplies.[15] We received 47 survey responses representing 41 states; Washington, D.C.; and all five territories. Key findings from our nationwide survey are detailed below.
  • States are fulfilling PPE requests, but supplies of some PPE remain constrained. The majority of states that responded to our survey received requests for supplies from organizations and entities within their states, and were mainly able to fulfill them. However, availability constraints continue with certain PPE, such as nitrile gloves. More than half the states reported having obtained supplies from either the commercial market or the Federal Emergency Management Agency (FEMA) in the past 30 days, indicating that states could not completely fulfill requests from supplies they had on hand. Almost three-quarters of states (34) reported having obtained PPE from FEMA, which indicates challenges in procuring these supplies from the commercial market, as states would only request supplies from FEMA when they were unable to meet their needs through the commercial market. States varied in their level of confidence in their ability to fulfill PPE requests they may receive in the 60 days following the survey. For example, 32 states were greatly or completely confident in their ability to fulfill future requests for face shields and goggles. In contrast, about one-third (17) of states were greatly or completely confident in their ability to fulfill future requests for nitrile gloves; 15 states responded that they were only slightly or not at all confident in their ability to fulfill future requests for nitrile gloves (see fig. 5).

Figure 5: Extent of States’ Confidence in Ability to Fulfill Future Requests for Selected Personal Protective Equipment (PPE)

Note: We sent a survey to senior officials in the public health and/or emergency management departments of all 50 states; Washington, D.C.; and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands), fielded from October 10 through October 21, 2020. We received responses from 47 of the 56 locations, representing 41 states, Washington D.C., and all five territories. Not all states responded to each survey question. For this survey question, we asked states the extent to which they were confident in their ability to fulfill requests for selected PPE items in the 60 days following the survey. All 47 states responded for all PPE types listed above except for non-surgical masks (46) and boot covers (45).
  • Shortages reported for three of five types of testing supplies. About one-third to one-half of the states that responded to our survey reported shortages in three types of testing supplies at their testing sites or laboratories in the 30 days preceding the survey: reagents (21 states), testing instruments (16 states), and rapid point-of-care tests (24 states) (see fig. 6). Similarly, when asked about testing supply availability for the 60 days following the survey, half the states (22) expected shortages in rapid point-of-care tests, and 20 states expected shortages in reagents. This is consistent with our September 2020 report, where we reported that officials in several states we interviewed identified difficulties in acquiring reagents and test kits from the commercial market.

Figure 6: State-Reported Supply Shortages for Testing Sites or Laboratories

Note: We sent a survey to senior officials in the public health and/or emergency management departments of all 50 states; Washington, D.C.; and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands); fielded from October 10 through October 21, 2020. We received responses from 47 of the 56 locations, representing 41 states; Washington, D.C.; and all five territories. Not all states responded to each survey question. For this survey question, we asked states whether testing sites or laboratories had experienced shortages of selected testing supplies in the 30 days preceding the survey. Forty-six states responded for all testing supply types listed above.
  • Planning for future COVID-19 vaccine supply needs. Most states (38) responding to our survey expressed concerns about having adequate supplies to distribute and administer a future COVID-19 vaccine. In open-ended responses, senior officials from six states stated that they were specifically concerned about the federal government’s ability to supply needles, given reports of shortages; three of those states also reported challenges maintaining supplies of needles for their states’ flu vaccination efforts.
  • Working with the federal government to meet supply needs. In September 2020, we reported that state and other nonfederal partners experienced three types of challenges in working with the federal government to meet supply needs: (1) knowing which federal supplies would arrive and when; (2) confirming the right entities received correct and usable supplies when federal programs delivered them directly to local organizations or entities; and (3) determining how to plan and budget for future supply needs. Our survey results indicate that while most states did not report challenges in knowing which supplies would arrive and when, many states continue to experience other types of challenges. Specifically, a majority of states reported experiencing challenges in tracking supplies that were delivered directly to local points of care (26 states); gaining clarity on the state’s share of the cost for supplies already requested and delivered (27 states); and budgeting for future supply needs (40 states).

Given these ongoing supply challenges and the surge in COVID-19 cases, we underscore the critical imperative of implementing our September 2020 recommendations on medical supply shortages. We recommended that (1) HHS, in coordination with FEMA, further develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate remaining medical supply gaps necessary to respond to the remainder of the pandemic; (2) HHS and FEMA help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the pandemic response; and (3) HHS, in coordination with FEMA, document roles and responsibilities for supply chain management functions. In November 2020, HHS repeated its disagreement with our recommendations and noted its efforts to meet the needs of states. We continue to monitor the implementation of our recommendations and review the medical supply chain, including pharmaceuticals, supplies for testing, and the management of the SNS.

COVID-19 Testing

Testing supply shortages have contributed to delays in turnaround times for testing results, which can in turn exacerbate outbreaks by allowing COVID-19 to spread undetected. In September 2020, we reported on challenges with testing supply availability, and since then we have identified challenges with federal testing strategy and guidance. HHS agencies have taken several key actions to support testing, including procuring tests for long-term care settings and schools, obtaining stakeholder input, and issuing guidance. For example, CDC, the Centers for Medicare & Medicaid Services (CMS), and FDA have issued guidance to assist health departments, medical providers, nursing homes, schools, workplaces, and laboratories, including for implementing and prioritizing testing.

However, CDC testing guidelines have been changed several times over the course of the pandemic, with little scientific explanation of the rationale behind the changes, raising the risk of confusion and eroding trust in important federal partners. We are recommending that HHS ensure that CDC clearly discloses the scientific rationale for any change to testing guidelines at the time the change is made. HHS concurred with our recommendation.

COVID-19 Vaccines and Therapeutics

In September 2020, we recommended that HHS, with support from the Department of Defense (DOD), set a time frame for documenting and sharing a national plan for distributing and administering a COVID-19 vaccine, and ensure that the plan is consistent with project planning best practices and outlined vaccine coordination efforts across federal agencies and nonfederal entities. On September 16, 2020, HHS and DOD released a strategy for the distribution and administration of any COVID-19 vaccine, including guidance to assist state, territorial, and local public health programs and their partners plan and operationalize local vaccination response to COVID-19.[16] However, representatives of state and local public health officials and health care providers have identified several areas where federal planning efforts needed additional information and assistance, such as the criteria for vaccine allocation to state and local jurisdictions and the roles and expectations of states in distributing a COVID-19 vaccine. We continue to examine the federal government’s vaccine distribution planning efforts.

More recently, on November 17, 2020, we reported on efforts to develop, manufacture, and distribute COVID-19 vaccines and therapeutics. [17] These efforts include Operation Warp Speed, a partnership between HHS and DOD that aims to accelerate the development, manufacturing, and distribution of COVID-19 vaccines and therapeutics (see fig. 7). The goal of Operation Warp Speed is to produce 300 million doses of a COVID-19 vaccine, with initial doses available by January 2021. As of October 15, 2020, Operation Warp Speed had publicly announced more than $10 billion in obligations for the development and manufacturing of six COVID-19 vaccine candidates, as well as funds for the development and manufacturing of COVID-19 therapeutics.

Figure 7: Operation Warp Speed Timeline for a Potential Vaccine Candidate

Note: An FDA Authorization for Emergency Use (or Emergency Use Authorization) allows for emergency use of medical products without FDA approval or licensure during a declared emergency, provided certain statutory criteria are met. See 21 U.S.C. § 360bbb-3.

As of November 9, 2020, FDA had approved one therapeutic—remdesivir—and made four available through Emergency Use Authorizations (EUA)—which allows for emergency use of medical products without FDA approval or licensure, provided certain statutory criteria are met. [18] However, the evidence to support FDA’s COVID-19 therapeutic authorization decisions has not always been transparent, in part because FDA does not uniformly disclose its scientific review of safety and effectiveness data for EUAs, as it does for approvals of new drugs and biologics. To improve the transparency of, and ensure public trust in, its EUA decisions, we recommended that FDA identify ways to uniformly disclose information from its scientific review of safety and effectiveness data to the public when issuing EUAs for therapeutics and vaccines, and, if necessary, seek authority to do so. HHS neither agreed nor disagreed with the recommendation, but said it shared GAO’s goal of transparency and would explore approaches to achieve this goal.

While no vaccines were available to prevent COVID-19 at the time of our November 17 report on vaccine development and EUAs, several candidates were under development. On November 20, 2020, Pfizer announced in a press release that it submitted an EUA request for its COVID-19 vaccine candidate. On November 16, Moderna announced in a press release that it also planned to submit an EUA request for its candidate.

In addition, DOD has allocated approximately $1.64 billion from the CARES Act for fiscal years 2020 through 2021 to support medical research and development efforts for COVID-19, including vaccines, diagnostics, and therapeutics, through partnerships between military health system components and various academic and commercial partners. In September 2020, DOD announced that it will support clinical trials for an Operation Warp Speed vaccine candidate at five of its military medical treatment facilities. DOD also has five vaccine development projects, three of which could have applications for the general population but are not candidates of Operation Warp Speed. DOD stated that it is producing thousands of doses of one of these vaccine candidates for availability by the end of 2020. DOD noted that the other vaccine projects are being designed to meet DOD’s operational needs, so that, for example, the vaccines can be stored and used in more austere locations.

Nursing Home Care

The health and safety of the 1.4 million elderly or disabled residents in the nation’s more than 15,000 Medicare- and Medicaid-certified nursing homes—who are often in frail health and living in close proximity to one another—has been a particular concern during the COVID-19 pandemic. According to CDC case reporting data, as of October 4, 2020, these nursing homes had cumulatively reported a total of 252,785 resident and 206,052 staff confirmed cases of COVID-19, along with 59,576 resident and 954 staff deaths as a result of the virus—about 29 percent of the total COVID-19 deaths across the U.S. (208,821 on October 4, as reported by CDC).[19]

In September 2020, we recommended that HHS, in consultation with CMS and CDC, develop a strategy to capture more complete data on confirmed COVID-19 cases and deaths in nursing homes, and clarify the extent to which nursing homes have reported prior data. As of October 23, 2020, no specific actions had been taken by HHS, although the agency indicated that it continues to consider how to implement this recommendation.

We have identified new concerns related to HHS’s response to recommendations made by the Coronavirus Commission on Safety and Quality in Nursing Homes (which we refer to as the Nursing Home Commission). In June 2020, CMS established the Nursing Home Commission to conduct a comprehensive and independent assessment of the response to the COVID-19 pandemic in nursing homes. In September 2020, the Nursing Home Commission made 27 recommendations on topics such as testing, PPE, and visitation.[20]

CMS released a response to the Nursing Home Commission that broadly outlined the actions it has taken to date as part of its response to the COVID-19 pandemic. However, CMS has not fully addressed the Nursing Home Commission’s recommendations, or provided an implementation plan that would allow it to track and report progress toward implementing them. CMS also stated that some of the recommendations are outside its authority and better addressed by other stakeholders. However, as the lead federal agency for nursing home quality and safety, CMS has an important role in coordinating with federal, state, and other long-term care stakeholders, as specified in multiple Nursing Home Commission recommendations.

To better inform its response, and that of other key stakeholders, to COVID-19 in nursing homes, we are recommending that CMS quickly develop a plan that further details how it intends to respond to and implement, as appropriate, the Nursing Home Commission’s recommendations. The plan should (1) include milestones that allow CMS to track and report on the status of each recommendation; (2) identify actions taken and planned, including areas where CMS determined not to take action; and (3) identify areas where CMS could coordinate with other federal and nonfederal entities. HHS neither agreed nor disagreed with our recommendation, and said it would refer to and act upon the Commission’s recommendations, as appropriate.

Additionally, we have identified shortcomings in the Department of Veterans Affairs (VA) inspections of state veterans homes (SVH), which provide nursing home care to more than 20,000 veterans in over 150 facilities. The health and safety of these veterans has been of particular concern because almost half of all veterans in SVHs are aged 85 or older—the age group at the greatest risk for severe illness from COVID-19, according to CDC data.

In March 2020, VA—the federal agency that conducts routine inspections of all SVHs—instructed its contractor to stop inspections of SVHs, which had been conducted in person, due to concerns about COVID-19; as of September 2020, these inspections had not resumed, leaving veterans at risk of receiving poor quality care. Additionally, VA does not collect timely data on the number of COVID-19 cases and deaths occurring at each SVH, and, as a result, cannot monitor and take steps to mitigate the spread of COVID-19 in SVHs. We are recommending that VA (1) develop a plan to ensure inspections of SVHs occur during the pandemic, which may include using in-person, a mix of virtual and in-person, or fully virtual inspections, and (2) collect timely data on COVID-19 cases and deaths in each SVH. VA concurred with both recommendations.

Assistance to Individuals and Businesses

As the pandemic’s economic effects persist, we have identified actions federal agencies could take to help ensure that financial relief for individuals and businesses provided under the CARES Act reaches eligible recipients.

Specifically, the CARES Act included direct payments, or economic impact payments (EIP), for eligible individuals to address financial stress due to the pandemic—up to $1,200 per eligible individual or $2,400 for individuals filing a joint tax return, plus up to $500 per qualifying child.[21] We have made three recommendations related to EIPs. In June 2020, we recommended that the Internal Revenue Service (IRS) consider cost-effective options for notifying ineligible recipients on how to return payments. Treasury and IRS have taken steps to implement this recommendation and are considering further actions. For example, IRS has instructions on its website requesting that individuals voluntarily return by mail the appropriate EIP amount sent to a decedent.

In September 2020, we recommended that Treasury, in coordination with IRS, update and refine estimates of eligible recipients who have yet to file for an EIP and share this information with outreach partners to aid in outreach and communications efforts. Treasury and IRS have taken several actions consistent with our recommendations, such as using tax return information to identify individuals that they may be eligible for an EIP. Starting on September 17, 2020, IRS sent a notice to around 9 million individuals who had not received an EIP. On November 10, 2020, IRS and outreach partners launched a final push to encourage non-filers to register to receive an EIP. However, Treasury and IRS are not monitoring the effectiveness of the outreach notices. Further, Treasury and IRS said that they do not plan to track and analyze the outcomes of their EIP notice-mailing strategy until February or March 2021.

The lack of timely analysis deprives Treasury and IRS of data they could use to assess the effectiveness of their notice strategy, and redirect resources as needed to other outreach and communication efforts. We are recommending that Treasury, in coordination with IRS, begin tracking and publicly reporting the number of individuals who were mailed an EIP notification letter and subsequently filed for and received an EIP, and use that information to inform ongoing outreach and communications efforts. Treasury agreed with our recommendation.

To provide liquidity to businesses during the pandemic, the CARES Act also included tax measures to help businesses, including sole proprietors, receive cash refunds or other reductions to tax obligations.[22] Some taxpayers need to file an amended income tax return to take advantage of these provisions; at the same time, IRS faces an increase in mail and paper processing delays due to the pandemic, which may delay the timely processing of this paperwork and issuance of these refunds. In a draft of this report, we recommended that IRS update its temporary procedures for taxpayers to include information on its new electronic filing capability to enable taxpayers to file amended returns and refund claims more effectively. IRS implemented this recommendation prior to the report’s final issuance. However, IRS form instructions were not updated with the new e-file information. As a result, some taxpayers who go directly to the form instructions may not know about the e-file option. We are recommending that IRS also update its form instructions to include information on its new electronic filing capability. IRS agreed with our recommendation.

Further, the federal government should take additional steps to clarify its reporting of the number of individuals claiming unemployment benefits during the COVID-19 pandemic. The CARES Act created three federally funded temporary programs for unemployment insurance (UI)—a federal-state partnership that provides temporary financial assistance to eligible workers who become unemployed through no fault of their own—that expanded UI benefit eligibility and enhanced benefits. As some of these programs approach their scheduled expiration in December 2020, the UI system continues to experience high numbers of claims as a result of the pandemic.

We found that some of the Department of Labor’s (DOL) reporting has improperly presented UI claims counts as the number of individuals claiming benefits, which has complicated efforts to understand how the size of the population being supported has changed during the pandemic and the potential effects of the expiration of CARES Act UI benefits. Each week, DOL publishes the number of weeks of unemployment benefits claimed by individuals in each state during the period, and reports the total count as the number of people claiming benefits nationwide. However, the number of claims has not been an accurate approximation of the number of individuals claiming benefits during the pandemic because of backlogs in processing a historic volume of claims as well as other data issues.

We are recommending that DOL (1) revise its weekly news releases to clarify that in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits and (2) pursue options to report the actual number of distinct individuals claiming benefits, such as by collecting these already available data from states, starting from January 2020 onward. DOL agreed with our first recommendation and partially agreed with our second recommendation. DOL did not agree with the retroactive reporting of the number of distinct individuals claiming UI benefits, in part because state UI programs may face challenges in implementing any new reporting requirements, particularly retroactively. We maintain that DOL should pursue options to report these data retroactively because they are vital to understanding how many individuals are receiving UI benefits, as well as the size of the population supported by the UI system during the pandemic.

Program Integrity

We continue to identify areas to improve program integrity and reduce the risk of improper payments for programs funded by the COVID-19 relief laws now that federal agencies have obligated and expended about half of the $2.6 trillion appropriated for response and recovery efforts. We previously raised one matter for congressional consideration and made two recommendations to federal agencies to improve oversight of key COVID-19 relief programs and reduce improper payments; to date, these recommendations remain open. We again call attention to these critical areas.
  • In June 2020, we urged Congress to amend the Social Security Act to explicitly allow the Social Security Administration (SSA) to share its full death data with Treasury for data matching to prevent payments to ineligible individuals. In June 2020, the Senate passed S. 4104, referred to as the Stopping Improper Payments to Deceased People Act. If enacted, the bill would allow SSA to share these data with Treasury’s Bureau of the Fiscal Service to help prevent making improper payments to deceased individuals.
  • In June 2020, we recommended that the Small Business Administration (SBA) develop and implement plans to identify and respond to risks in the Paycheck Protection Program (PPP) to ensure program integrity, achieve program effectiveness, and address potential fraud. The CARES Act and the Paycheck Protection Program and Health Care Enhancement Act appropriated a total of $670 billion for PPP under SBA’s 7(a) small business lending program.[23] Consistent with our recommendation, SBA told us it has developed oversight plans to review PPP loans, but it has not yet provided requested documentation detailing its plans and how it will implement them, such as documents that would allow us to evaluate the efficacy of the reviews in identifying noncompliance and potential fraud. According to SBA and Treasury, SBA’s loan review process will test loans for compliance with program requirements and evaluate the accuracy of PPP borrowers’ self-certifications.
  • In September 2020, we recommended that the Office of Management and Budget (OMB), in consultation with Treasury, issue guidance for auditing new and existing COVID-19-related programs, including Coronavirus Relief Fund (CRF) payments, as soon as possible. The CRF is the largest program established in the four COVID-19 relief laws that provides aid to states, the District of Columbia, localities, tribal governments, and U.S. territories. Audits of entities that receive federal funds, including CRF payments, are critical to the federal government’s ability to help safeguard those funds. OMB said that it planned to issue this guidance in mid-November 2020. Delays in issuing this guidance could adversely affect auditors’ ability to issue consistent and timely reports.

In this report, we also identify new concerns about the timely reporting of improper payments for COVID-19 programs. The COVID-19 relief laws appropriated over a trillion dollars that may be spent through newly established programs to fund response and recovery efforts, such as PPP and UI. While the extent and significance of improper payments associated with these funds has not yet been determined, the impact of improper payments, including those that are the result of fraud, could be substantial. We also have concerns about the possibility that improper payments could be widespread based on indications of fraud across these programs. For example:
  • Eight individuals pleaded guilty to federal charges of defrauding COVID-19 relief programs—including SBA’s PPP and Economic Injury Disaster Loan program, and DOL’s UI program—from March through September 2020. In one case, an individual pleaded guilty to conspiring to defraud the U.S. by applying for 18 separate PPP loans for four shell companies, falsely claiming, among other things, that the businesses had employees and needed the loans to pay employees’ salaries, thereby fraudulently inducing banks to distribute approximately $1.4 million in loans.
  • There are 130 individuals facing federal charges related to attempting to defraud these programs.[24]
  • Numerous fraud-related investigations have been initiated by Offices of Inspector General and other law enforcement agencies.[25]

According to OMB guidance, agencies should complete a risk assessment to determine susceptibility to significant improper payments after the first 12 months of program operations, and such a determination of susceptibility triggers reporting requirements for the following fiscal year.[26] Given the rapid timeline of COVID-19 program-related spending, such time lags in assessing risk and developing corrective actions may result in improper payment issues in COVID-19 programs, including those resulting from fraudulent activities, not being identified or addressed until after most or even all funds are disbursed.

It is especially important for agencies with large appropriated amounts, such as SBA, to expeditiously estimate their improper payments, identify root causes, and develop corrective actions when there are concerns about the possibility of widespread fraud. It is also important that existing programs that have received significant COVID-19 relief funding and have previously reported high estimated improper payment rates, such as the Medicaid program, develop reliable improper payment estimates and corrective action plans.

In addition, previous supplemental appropriations acts that provided for disaster relief related to the 2017 hurricanes and California wildfires required agencies to deem all programs receiving these relief funds that expended more than $10 million in any one fiscal year as "susceptible to significant improper payments."[27] Agencies were therefore required to report improper payment estimates for such programs without the need to conduct a risk assessment. The COVID-19 relief laws did not contain a similar provision.

To hold agencies accountable and increase transparency, we are suggesting that Congress consider, in any future legislation appropriating COVID-19 relief funds, designating all executive agency programs and activities making more than $100 million in payments from COVID-19 relief funds as “susceptible to significant improper payments.”

We are also making two recommendations: (1) OMB should develop and issue guidance directing agencies to include COVID-19 relief funding with associated key risks, such as provisions contained in the CARES Act and other relief legislation that potentially increase the risk of improper payments or changes to existing program eligibility rules, as part of their improper payment estimation methodologies, especially for existing programs that received COVID-19 funding, and (2) SBA should expeditiously estimate improper payments and report estimates and error rates for PPP due to concerns about the possibility that improper payments, including those resulting from fraudulent activity, could be widespread. OMB and SBA neither agreed nor disagreed with our recommendations. SBA stated that it is planning to conduct improper payment testing for the PPP, but has not finalized its plan.

We also identified concerns about efforts to monitor the financial assistance that the CARES Act authorized Treasury to provide to the aviation sector. Treasury’s Payroll Support Program (PSP) provides $32 billion in payroll support payments and loans to help the aviation industry retain its employees.[28] The CARES Act requires PSP recipients to report quarterly to Treasury information on their compliance with PSP agreement terms, which include refraining from involuntary furloughs or reductions in pay rates and benefits until September 30, 2020, and certain share buybacks, dividend payments, and other capital distributions until September 30, 2021, among other conditions.[29]

However, Treasury has not yet completed its plan and guidance to fully describe how it will monitor recipients’ compliance with the terms of this assistance or to take action if noncompliance is found, potentially hindering Treasury’s ability to detect misuse in a timely manner that allows for remediation, such as the use of PSP funds for purposes other than the continuation of employee wages, salaries, and benefits. To ensure program integrity and address potential fraud, we are recommending that Treasury finish developing and implement a compliance monitoring plan that identifies and responds to risks in PSP. Treasury neither agreed nor disagreed with our recommendation, but committed to reviewing additional measures that may further enhance its compliance monitoring and ensure that PSP funds are used as intended.

Additional Matters for Congress and Agency Recommendations

Beyond these six key areas, we also made recommendations and matters for congressional consideration in other areas throughout the federal government in our June 2020 and September 2020 reports on the federal response to COVID-19.

In June 2020, we urged Congress to take action on areas related to aviation preparedness and Medicaid funding to states.
  • To limit the spread of communicable disease threats and minimize travel and trade impacts, we recommended that Congress take legislative action to require the Department of Transportation (DOT) to work with relevant agencies and stakeholders, such as HHS, the Department of Homeland Security (DHS), members of the aviation and public health sectors, and international organizations, to develop a national aviation-preparedness plan. We originally made this recommendation to DOT in December 2015.[30]

    In May 2020, the House of Representatives passed H.R. 6800, referred to as the HEROES Act, which would require DOT, in coordination with HHS, DHS, and other appropriate federal departments and agencies, to develop a national aviation preparedness plan. Most recently, in September 2020, the Senate passed S. 3681, Ensuring Health Safety in the Skies Act of 2020, which would require HHS, DHS, and DOT to form a joint task force on air travel during and after the COVID-19 public health emergency, among other provisions. Also, in October 2020, H.R. 8712, National Aviation Preparedness Plan Act of 2020, was introduced. If enacted, this bill would require DOT, in collaboration with DHS, HHS, and other aviation stakeholders, to develop a national plan to prepare the aviation industry for future communicable disease outbreaks.

    We again urge Congress to take swift action to require a national aviation-preparedness plan, without which the U.S. will not be as prepared to minimize and quickly respond to ongoing and future communicable disease events.
  • To help ensure that federal funding is targeted and timely, we urged Congress to use GAO’s Federal Medical Assistance Percentage formula to determine the timing and increase in Federal Medical Assistance Percentage—which determines the amount of federal Medicaid funding provided to states—for any future changes to the current or any future economic downturn. Our past work has found that during economic downturns—when Medicaid enrollment can rise and state economies weaken—the formula, which is based on each state’s per capita income, does not reflect current state economic conditions. No congressional action has been taken to date.

In September 2020, we made recommendations to CDC, DOD, and DHS regarding their management and oversight of certain COVID-19 response efforts.
  • To ensure the successful implementation of CDC’s COVID-19 Response Health Equity Strategy—which aims to reduce disparities in indicators of COVID-19, among other health equity efforts—we recommended that CDC (1) evaluate whether to require the reporting of race and ethnicity information for COVID-19 data and, if so, seek authority from Congress to do so, (2) involve key stakeholders to ensure the complete and consistent collection of demographic data, and (3) ensure its ability to assess the long-term health outcomes of persons with COVID-19, including by race and ethnicity. In response to our recommendations, CDC stated that the agency is committed to having discussions with stakeholders to assess whether having the authority to require states and jurisdictions to report race and ethnicity information for COVID-19 cases would result in improved reporting. CDC also said that it is developing a plan to monitor the long-term health outcomes of persons with COVID-19 by identifying health care surveillance systems that can electronically report health conditions to state and local health departments. We continue to examine CDC and HHS efforts related to COVID-19 indicators and disparities that exist for various populations.
  • To ensure state and local school district officials have clear guidance to make decisions about the safety of school buildings and opening schools for in-person instruction, we recommended that CDC ensure that updates to its guidance on schools’ operating status is cogent, clear, and internally consistent. Since September 2020, CDC has made progress in updating its reopening guidance. However, this recommendation remains open as of November 12, 2020 because the guidance remains inconsistent and unclear in places. We continue to review CDC guidance.
  • To ensure HHS component agencies involved in supporting the critical health care infrastructure and systems responding to COVID-19 are protected from cybersecurity threats, we recommended that HHS expedite the implementation of our prior recommendations to address cybersecurity weaknesses at its component agencies. FDA, CMS, and CDC have implemented an additional 54 cybersecurity recommendations since September 2020. This brings the total number of implemented cybersecurity recommendations to 404 (of 434)—a 12 percent increase of corrective actions taken to bolster cybersecurity at these agencies.
  • To enhance the visibility and proper tracking of contract actions and associated obligations related to COVID-19, we recommended that DOD and DHS revise the National Interest Action (NIA) code memorandum of agreement to, among other things, obtain input from key federal agencies prior to extending or closing an NIA code. In October 2020, DOD and DHS told us that they planned to review and update the memorandum of agreement by the end of calendar year 2020 to include additional details on practices for communicating with other agencies. We maintain that revising the memorandum of agreement is necessary to ensure consistency and increase transparency on extending and closing NIA codes.

Closing 


As we approach the end of 2020, the federal government must be agile to address the ongoing and evolving challenges and risks associated with the COVID-19 pandemic. Our recommendations identify new opportunities for the federal government to make midcourse corrections to its efforts by improving the communication of pandemic-related guidance and information, the collection and reporting of key public health and economic data, and the oversight and accountability of CARES Act programs. We will continue to monitor the federal government’s response to the COVID-19 pandemic and identify any needed improvements.

We are sending copies of this report to the appropriate congressional committees, the Director of the Office of Management and Budget, the White House Coronavirus Task Force, and other relevant agencies. In addition, the report is available at no charge on the GAO website at https://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-5500 or dodarog@gao.gov. Questions can also be directed to Kate Siggerud, Chief Operating Officer, at (202) 512-5600; A. Nicole Clowers, Managing Director, Health Care, at (202) 512-7114 or clowersa@gao.gov; or Orice Williams Brown, Managing Director, Congressional Relations, at (202) 512-4400 or williamso@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report.

Gene L. Dodaro

Comptroller General of the United States

Congressional Addressees

The Honorable Richard C. Shelby
Chairman
The Honorable Patrick J. Leahy
Vice Chairman
Committee on Appropriations
United States Senate

The Honorable Lamar Alexander
Chairman
The Honorable Patty Murray
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable Ron Johnson
Chairman
The Honorable Gary C. Peters
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate

The Honorable Nita M. Lowey
Chairwoman
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives

The Honorable Frank Pallone, Jr.
Chairman
The Honorable Greg Walden
Republican Leader
Committee on Energy and Commerce
House of Representatives

The Honorable Bennie Thompson
Chairman
The Honorable Mike D. Rogers
Ranking Member
Committee on Homeland Security
House of Representatives

The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James R. Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives

Appendixes and Enclosures 


IN THIS SECTION


Appendix I: Enclosures

Health Care Indicators

Overview of indicators to help guide federal monitoring of the health system’s response, recovery, and preparedness. In our June and August 2020 reports, we outlined eight health care (and related economic) indicators that could help the federal government monitor the status of the U.S. health system’s response to and recovery from the COVID-19 pandemic, as well as its preparedness for future outbreaks.[31] For this report, we obtained input from a selection of five experts that we identified in collaboration with the National Academies of Sciences, Engineering, and Medicine (National Academies) with backgrounds in public health (infectious disease and epidemiology), health systems, and health care costs.

We asked each expert a core set of questions to obtain their input on the indicators we previously reported on and on other indicators that should be monitored in the following broad areas: (1) the effects of the pandemic on population health outcomes; (2) the ability of the public health system to help reduce disease transmission; (3) the capacity of the health care system to provide needed care; and (4) the economic effects of the pandemic on the health care sector. In addition, we asked experts to provide input on any limitations associated with such indicators.

All five experts generally agreed that it is important for the federal government to monitor indicators in the broad areas we identified. They also stated that the eight indicators we had previously reported on generally reflect these broad areas and provided considerations regarding their use, limitations, and interpretation. Experts also identified additional indicators for the federal government to monitor to better understand the broad areas we identified. We provide updates to data on indicators we previously reported on in cases where sufficiently reliable data are available.[32] We plan to continue working with additional experts identified by the National Academies to obtain their input on these and other indicators.

Population health effects of COVID-19. Experts recommended tracking indicators of population health outcomes, including two types of mortality measures. First, three experts told us that tracking the total number of deaths specifically attributed to COVID-19 would help the federal government to better understand the direct effect of the pandemic on mortality. However, two experts noted that the insights provided by this measure are constrained by inconsistencies in how COVID-19 cases are identified and counted across different jurisdictions and at different points in time. To varying degrees, the number of reported COVID-19 deaths is likely to be undercounted.[33] In total, the Centers for Disease Control and Prevention’s (CDC) National Center of Health Statistics (NCHS) reported that the number of reported COVID-19 deaths was about 219,000 as of November 6, 2020.[34]

In addition to monitoring COVID-19 deaths, all the experts we met with also recommended monitoring higher than expected deaths. This is an indicator we describe in our August 2020 report that measures mortality from all causes compared to historical norms; it can be used to address the imperfect reporting of COVID-19 deaths. Three experts explained that the number of higher than expected deaths provides insights into the total effect of the pandemic on population health. Specifically, the indicator measures both the direct effect of the pandemic on mortality (i.e., through COVID-19 deaths whether recognized as such or not) and the indirect effect that includes deaths from causes other than COVID-19. As an example of an indirect effect, one expert explained that the number of deaths due to chronic conditions such as cardiovascular disease and diabetes may be elevated during this pandemic due to the disruption in access to routine, preventative health care services.[35] According to data from CDC’s NCHS, at least 237,000 more deaths occurred from all causes (COVID-19 and other causes) than would be normally expected, between January and October 2020.[36]

Three experts that we spoke with also emphasized the importance of examining these mortality measures over time and by age, race, and ethnicity to assess the burden of COVID-19 deaths across demographic groups.[37] For example, two experts noted that examining mortality indicators in relation to the incidence of COVID-19 infections over time would allow officials to understand what proportion of the population may still be vulnerable to infection and death from COVID-19. The same rate of COVID-19 mortality or higher than expected deaths would be more concerning in areas that had not previously experienced a substantial level of COVID-19 cases.

In addition to mortality, three experts suggested monitoring other indicators of disease burden could be beneficial, such as incidence rates of other conditions (compared to historical norms), because mortality indicators alone do not fully capture the effects of the pandemic on population health. For example, there are certain health conditions (e.g., heart attacks, strokes) that can be tracked readily that may occur at higher rates in the absence of routine care due to the disruptions in the health care system resulting from the pandemic. Furthermore, although data are not yet available, three experts noted that some patients with COVID-19 who survive will experience persistent complications of COVID-19 and should be tracked over time to understand the long-term effects and resulting health conditions.

Public health system’s ability to help reduce disease transmission. All experts generally suggested tracking indicators that reflect the ability of the public health system to help reduce disease transmission may be helpful in responding to the pandemic. These indicators include the test positivity rate, contact tracing performance, and COVID-19 testing turnaround time. As we previously reported, the proportion of COVID-19 viral tests in a given population that are positive for infection (the positivity rate) is one indicator of the sufficiency of testing.[38] To reduce disease transmission, testing must be sufficient to determine the magnitude of the disease. For example, a higher positivity rate could indicate that not enough testing is being conducted to find and isolate infected individuals before they spread the disease further.

The experts described several limitations associated with the calculation and interpretation of positivity rates[39]:
  • Short-term repeated testing. One expert expressed concerns that some states include the results from repeated testing of the same individuals (e.g., college students) over a short period of time to calculate the positivity rate. This expert explained that including results from successive tests in the calculation of positivity rate in this manner could bias the positivity rate toward a lower point if the individuals tested repeatedly are at lower risk for COVID-19 infection.
  • Non-standardized data. Two experts also expressed concerns with how the collection of COVID-19 testing data is not standardized across states. As an example, the experts told us that some states combine viral and antibody tests when collecting testing data.
  • Interpretation of test positivity rate. One expert emphasized that the positivity rate should be used as a measure of testing sufficiency and not as an indicator of the prevalence of COVID-19 in a community. The reported rate will be affected by the criteria being used to determine who should be tested, which may not include all who might be at risk. For example, if mainly symptomatic people are tested, then test positivity rates are expected to overestimate the true community prevalence. The proportion is expected to decline as testing expands to include those that are not infected. This expert noted that states often misinterpret the positivity rate as the percentage of the population that is infected with COVID-19 and use this information as a basis for decisions to impose restrictions to contain COVID-19 (e.g., travel restrictions).

In addition to positivity rate, three experts suggested it might be beneficial to monitor contact tracing performance and COVID-19 test turnaround times to gain further insight into the ability of the public health system to help reduce disease transmission. Contact tracing is a process in which trained public health officials attempt to limit disease transmission by identifying infected individuals, notifying their “contacts”—all the people they may have transmitted the disease to—and asking infected individuals and their contacts to quarantine, if appropriate.

Two experts suggested focusing on outcome measures for contact tracing performance, such as the percent of new COVID-19 cases identified among quarantined contacts (of infected individuals). They noted that such measures reflect how effective contact tracing is in helping to reduce disease transmission.[40] However, few states publicly report on such indicators.[41]

To be most effective, the contacts of infected individuals must be rapidly identified and notified. However, two experts noted significant challenges in doing so. One expert said that some infected individuals may not willingly identify their contacts and as a result, contact tracers are unable to notify them about their risk. Another expert told us that notifying identified contacts in a timely manner is unrealistic in areas with a large number of COVID-19 cases.

As for test turnaround times, three of the experts proposed monitoring the number of days from specimen collection to reporting of COVID-19 test result as an additional indicator. This is a telling indicator, two experts noted, because infected individuals may not quarantine quickly enough to prevent ongoing community transmission if test results are delayed, limiting the value of the tests. One expert said this measure will likely have more limited applicability in the future as point-of-care tests, which feature rapid results, become more available at provider offices or for patients to use at home.

Health care system’s capacity to provide needed care. The ability of the nation’s health care system to provide needed care during the pandemic is critical to monitor through indicators, our experts generally agreed. Indicators that assess this ability include the proportion of staffed intensive care unit (ICU) beds available to treat patients, other measures of hospital capacity, and the provision of health services unrelated to COVID-19.

In our August 2020 report, we stated that monitoring ICU bed availability over time offers insight on changes in our health care system’s capacity to care for the sickest patients with COVID-19 (i.e., those that may require respiratory support on a ventilator to survive). We have ongoing work examining the quality of hospital data that hospitals report to the Department of Health and Human Services (HHS).[42]

Three experts suggested examining ICU bed availability geographically because health care resources vary across areas, such as by state or region. The experts also provided insight into some limitations of ICU bed availability:
  • ICU bed classification. Two experts noted that this measure can vary based on how hospitals classify their beds. For example, as demand increases, some hospitals may be able to reclassify for the short term some of their non-ICU beds as ICU beds (given available equipment and staffing). While this allows those hospitals to meet the needs of additional patients, it also makes it challenging to determine the ICU bed capacity of those hospitals.
  • Evolving level of importance. Three experts told us that ICU bed availability may not be as valuable of a measure as it was early on in the pandemic given that a growing number of individuals hospitalized for COVID-19 do not require ICU care.

Given such limitations, the experts said it is important to monitor other indicators of hospital capacity in addition to ICU capacity to obtain a more complete understanding of hospital capacity. For example, experts suggested COVID-19 hospitalization rates and hospital bed availability (including ICU beds) as additional indicators.[43] One of these experts told us these indicators provide a more complete picture of hospitals’ capacity to provide necessary care for COVID-19 patients given that many do not require ICU care.

In addition, all five experts stated that the federal government should monitor indicators that reflect the capacity of the health care system to provide necessary services unrelated to COVID-19. For example, two experts suggested it may be beneficial to monitor whether individuals are able to receive care unrelated to COVID-19, including care for acute or chronic conditions, such as heart attacks and cancer treatments, and preventive care, such as vaccines for children and mammograms.

Health care sector economic effects of COVID-19. The five experts told us the indicators we identified in our June and August 2020 reports were appropriate to monitor effects of the pandemic on the health care sector of the economy, including hospital operating margin.[44]

One expert told us that additional information beyond hospital operating margin is needed to more accurately assess the financial condition of hospitals. Hospital operating margins are calculated with revenues and costs related to patient care and do not include revenue from other sources such as income from investments. Specifically, this expert stated that it is valuable to consider additional measures of hospital finances that include revenue from these other sources.

The expert explained that larger hospitals often have cash reserves from investments and other sources that are set aside for the purposes of emergencies and such reserves are not reflected in their operating margins. Without considering such reserves, hospital operating margins may indicate that some hospitals are in financial distress when they have adequate financial reserves available to make up for losses in revenue from patient care.

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS and OMB did not provide comments on this enclosure.

Contact information: Jessica Farb, 202-512-7114, farbj@gao.gov

Related GAO Products

COVID-19: Data Quality and Considerations for Modeling and Analysis. GAO-20-635SP. Washington, D.C.: July 30, 2020.

Science & Tech Spotlight: Contact Tracing Apps. GAO-20-666SP. Washington, D.C.: July 28, 2020.

Economic Indicators

The national economy has improved since July 2020 while key areas of the economy we are monitoring had mixed performance, with a slow recovery and weak conditions in some areas. [45] Indicators of access to credit for investment grade corporations, for example, have returned to levels that were typical prior to the pandemic. However, employment remains substantially lower than before the pandemic and more households have become seriously delinquent on mortgage payments during the pandemic. Our review of academic studies suggests that the pandemic will likely remain a significant obstacle to more robust economic activity.

Aggregate economic conditions in the U.S. improved in recent months according to the Federal Reserve Bank of New York’s Weekly Economic Index, which combines high-frequency economic data from a wide range of sources. [46] Nevertheless, the index suggests a large drop in economic activity relative to a year ago. Similarly, U.S. gross domestic product rose at a 33.1 percent annual rate in the third quarter of 2020, but remained 2.9 percent lower than a year ago. As we noted in our June 2020 report, the impact of the pandemic on the economy will reduce federal tax revenues while the fiscal response from the COVID-19 relief laws and heightened demands on federal social programs will increase expenditures. Federal debt held by the public increased from $20.6 trillion in July 2020 to $21 trillion in September 2020—growing at a slower rate but over $3 trillion higher than in February 2020—while 3-month Treasury interest rates fell 2 basis points from 0.13 percent to 0.11 percent between July 2020 and September 2020. [47]

Both imports to and exports from the U.S. rose in July and August 2020 as the economy continued to recover. Trade in transportation and travel services in August 2020 continued to be substantially below their levels from a year ago. Travel exports in August 2020, for example, were 77 percent lower than in August 2019. Measures of economic and financial stress in advanced and emerging market economies improved in August and were largely unchanged in September and October.

Indicators of areas of the economy supported by the federal pandemic response saw mixed performance, with slow employment growth and some weakening indicators of state and local government finances (see table).

Indicators for Areas of the Economy Supported by the Federal Pandemic Response, July 2020 through October 2020, cumulative change since February 2020

aThe employment-to-population ratio represents the number of employed people as a percentage of the civilian noninstitutional population 16 years and over and is subject to misclassification errors with respect to consistently identifying workers as employed and absent from work or unemployed on temporary layoff.
bHigher levels in the Consumer Credit Default Composite Index indicate more defaults on consumer loans, including auto loans, bank cards, and mortgages. The Consumer Credit Default Composite Index could be subject to seasonal variation but is not seasonally adjusted.
cLower levels in the Small Business Health Index indicate higher utilization of credit, delayed payments on credit, and more small business failures. The Small Business Health Index is published under license and with permission from Dun & Bradstreet and no commercial use can be made of these data.
dCorporate bond spreads are option-adjusted spreads on dollar-denominated investment grade corporate bonds and are measured in basis points or 1/100th of a percentage point. Higher spreads reflect higher perceived risk among corporate borrowers by investors.
eSpreads on municipal bonds are calculated relative to interest rates on Treasury securities based on the Bloomberg-Barclays Municipal Bond Index and are measured in basis points or 1/100th of a percentage point. Higher spreads reflect higher perceived risk among municipal borrowers by investors.
fExpenditures are in real (inflation-adjusted) dollars using chained 2012 dollars and are seasonally adjusted at annual rates.

Labor market conditions. The labor market has been recovering slowly as the employment-to-population ratio increased from 56.6 percent in September 2020 to 57.4 percent in October 2020—up from a historic low of 51.3 percent in April 2020 but substantially lower than before the pandemic. [48] Specifically, the employment-to-population ratio in October 2020 was 3.7 percentage points lower than in February 2020. [49] The monthly increase in total nonfarm employment slowed, adding 1.8 million, 1.5 million, 0.7 million, and 0.6 million jobs in July, August, September, and October 2020, [50] respectively, compared with the 4.8 million jobs added in June 2020. [51] Black and Hispanic workers saw larger percentage declines in the employment-to-population ratios from February to October 2020 compared with White workers. These declines were also larger for those without a bachelor’s degree. While the overall labor market has improved since May, net losses in employment compared with in February 2020 for the leisure and hospitality, mining and logging, and educational services sectors remained substantial (see figure). According to U.S. Bureau of Labor Statistics, employment for the federal government increased in August, reflecting the hiring of temporary 2020 Census workers, and decreased in October, driven by the loss of temporary 2020 Census workers.

Percentage Change in Employment by Sector, February through October 2020

Notes: The data for October are preliminary and are subject to revision by the Department of Labor.

Among the unemployed, the number of individuals on temporary layoff decreased considerably from 18.1 million in April 2020 to 3.2 million in October 2020. However, the number of unemployed individuals permanently losing jobs increased from 2.0 million in April 2020 to 3.7 million in October 2020 (see figure). While workers on temporary layoff expect to return to work, the increase in unemployed workers with permanent job losses could indicate more lasting economic disruption and greater difficulty returning to the labor market.

Number of Unemployed Workers Permanently Losing Jobs and on Temporary Layoff, January 2019 through October 2020

Note: The total number of workers losing jobs excludes individuals who completed temporary jobs but were not on "temporary layoff,” defined as people who have been given a date to return to work or who expect to return to work within 6 months.

Household financial conditions. Serious delinquency rates for single family mortgage loans—loans that are 90 or more days past due or in foreclosure—have increased substantially compared with May 2020 (see figure below), suggesting economic challenges facing homeowners. Serious delinquency rates increased on both conventional loans, specifically those guaranteed by Fannie Mae and Freddie Mac, as well as on loans insured by the Federal Housing Administration (FHA). Increases in delinquencies to some extent reflect borrowers taking advantage of mortgage forbearance provisions of the CARES Act but may also indicate financial challenges facing households. [52] Increases in delinquency rates on FHA loans in particular could indicate that minority and low-income households have experienced more financial hardship since the onset of the pandemic as FHA loans disproportionately serve minority and low-income borrowers. [53]

Serious Delinquency Rates on Single-Family Residential Mortgages, January 2019 through August 2020

Note: The serious delinquency rate on conventional loans is calculated based on a weighted average of serious delinquency rates of conventional loans guaranteed by Fannie Mae and Freddie Mac based on loan counts as of April 2020. Single-family seriously delinquent loans are 3 months or more past due or in the foreclosure process.

The Consumer Credit Default Composite Index—a broad measure of households’ ability to make scheduled payments—improved in September 2020. In addition, subindexes for bank cards and first mortgages improved in September 2020 relative to August 2020, but defaults on auto loans had increased during the same time period. [54]

Small business financial and credit conditions. The Small Business Health Index—a broad measure of the financial condition of small businesses from Dun & Bradstreet—improved slightly in September 2020. [55] As of September 2020, small businesses in the retail and automotive sectors had deteriorated the most since January 2020, with increases in business failures and growing delinquencies on credit cards driving the changes.

Despite improving financial conditions of small businesses in recent months, more banks have been tightening than loosening underwriting standards on the credit they extend to small businesses through the third quarter of 2020, according to data collected by the Federal Reserve. [56] In addition, more banks have been raising than lowering the premiums they charge small businesses during the same time period. These changes indicate that banks anticipated greater risk associated with making these loans going forward.

Corporate credit market conditions. Spreads on investment grade corporate bonds were largely unchanged in recent months, but remained very close to their prepandemic averages, suggesting that perceived risk among corporate borrowers and access to credit for corporations were similar to levels that were typical during the past few years, prior to the pandemic. [57]

State and local government finances. Tax revenue collected by state and local governments in the 2nd quarter of 2020 fell by 20.9 percent relative to the same quarter in 2019, greater than the largest year-over-year decline in state and local tax revenue during the Great Recession, and over 17 percent from the previous quarter (see figure), illustrating the fiscal challenges state and local governments have faced as a result of the COVID-19 pandemic. [58]

State and Local Government Tax Revenue, First Quarter 2019 through Second Quarter 2020

Spreads on municipal bonds have improved slightly since July 2020, suggesting that perceived risk among municipal borrowers and access to credit for state and local governments have also improved slightly. [59] State and local government employment, a timely measure of fiscal stress facing state and local governments as well as an indicator of the capacity of state and local governments to provide services to the public, increased in August but fell in September and October.

Financial condition of the health care sector. Recovery in health care sector employment continued in October 2020, with over 58,000 jobs added that month. [60] This increase brings the total number of health care jobs regained in the past 6 months to about 988,000, or about 63 percent of the almost 1.6 million jobs lost in March and April 2020 at the start of the COVID-19 pandemic. As of October 2020, health care employment was 4 percent below the February 2020 prepandemic level, with about 590,000 jobs lost.

In May through October 2020, ambulatory health care establishments, such as physicians’ and dentists’ offices, recovered about four-fifths (82 percent) of the more than 1.3 million ambulatory care jobs lost in March and April 2020 and accounted for most of the health care employment gains in October 2020. Hospitals, which lost about 161,000 jobs in April and May 2020, regained almost one-third (31 percent) by October 2020. In contrast, employment in nursing and residential care facilities continued to decline for most of this period. From May through October 2020, these facilities lost about 115,000 jobs, for a total of 238,000 jobs lost since February 2020.

In September 2020, personal consumption expenditures for health care rose for the fifth consecutive month since plummeting in March and April 2020. [61] However, at about $2.1 trillion (annualized), spending remained 6 percent below the February 2020 prepandemic level. [62] While expenditures for outpatient and hospital care began to rebound in May 2020, expenditures for nursing home care have continued to decline every month since April 2020. As of September 2020, expenditures for nursing home care ($141 billion annualized) were 13 percent below February 2020, consistent with persistent job losses in those facilities.

The decline in nursing home care expenditures may reflect reported COVID-19-related deaths among nursing home residents and decreased admissions due to factors including the postponement of nonessential surgeries that require post-acute care and concerns about increased infection risk posed by congregate living facilities. Some individuals in need of rehabilitative or long-term care may have instead opted for home health care, if possible, during this time as personal consumption expenditures for such care have risen every month since May 2020, and in September 2020, at $116 billion (annualized), were 2 percent higher than in February 2020.

Literature on COVID-19 and the economy. To better understand the major drivers of economic activity during the pandemic—including factors that are likely to influence the economic indicators we are monitoring—and the interdependence between the pandemic and the economy, we conducted a review of relevant empirical research. We reviewed research that assessed the potential effect of state and local government mandates, including shelter-in-place orders, and voluntary changes in economic behavior [63] on economic activity during the pandemic. [64]

While the manner in which the pandemic influences economic activity could change over time, our review of academic studies suggests that the pandemic will likely remain a significant obstacle to more robust economic activity. These studies consistently found that a decline in consumer demand related to concerns about COVID-19 played a large role in reducing economic activity during the initial stages of the pandemic. We found some evidence based on these studies that this reduction was associated with the severity of the pandemic. For example, economic activity tended to drop more significantly when the number of local COVID-19 cases and deaths increased. Finally, our review also suggests that the initial reopening of nonessential businesses and lifting of stay-at-home orders likely had only a small effect on economic activity.

Researchers consistently found that a decline in consumer demand related to concerns about COVID-19 had a significant impact on the economy during the initial stages of the pandemic. Consumers decided to voluntarily postpone or forgo purchases of certain types of goods and services, and reduced visits to businesses, before government stay-at-home mandates [65] went into effect. [66] Similarly, in the studies we reviewed researchers found consistent evidence that the impact of state and local government mandated restrictions further reduced economic activity. [67] For example, using data on foot traffic at individual businesses, one U.S. study found that foot traffic started to drop before the shelter-in-place orders were in place and that shelter-in-place orders further contributed to changes to consumer behavior. [68]

Similarly, another U.S. study found that for industries specializing in discretionary goods and services, such as entertainment and restaurants, more than two thirds of the decline in foot traffic was a voluntary response on the part of individuals and was not due to mandated restrictions. [69] One study compared Denmark with Sweden, where both countries were similarly exposed to the pandemic but only Denmark imposed significant restrictions on social and economic activities. The study found that aggregate spending dropped by around 25 percent in Sweden compared with 29 percent in Denmark. [70] Another study found that the drop in restaurant reservations in the U.S. predated the closing of nonessential businesses and that revenues dropped off entirely for Swedish movie theaters even though Sweden had no restrictions on nonessential businesses. [71]

We found some evidence that falling economic activity in the U.S. was associated with the severity of the pandemic. That is, consumer demand and mobility tended to drop more significantly when the number of local COVID-19 cases and deaths increased. For example, one study found that the first death in a county had a large and statistically significant impact on measures of mobility—typically mobile-phone based measures of how extensively individuals move around—and in most cases, the impact of the first death was larger than the effect of any single policy. [72] Another study found that the decline in consumer visits to businesses was associated with the number of COVID-19 deaths in a county. [73] Finally, using electricity as a proxy for economic activity, one study found that an increase in the number of COVID-19 cases led to a decrease in electricity usage. [74]

Studies analyzing consumption and mobility suggest that the initial reopening of nonessential businesses and lifting of stay-at-home orders likely had only a small effect on economic activity. For example, one U.S. study found that consumer spending trended similarly in states that reopened earlier relative to comparable states that reopened later. The authors concluded that governments may have limited capacity to restore economic activity through reopenings, especially if those reopenings are not interpreted by consumers as a clear signal of reduced health risk. [75] Another U.S. study found that the effect of repealing stay-at-home orders on consumer visits to stores was small. [76] In addition, using real-time customer traffic data to malls in China, one study found that 9 weeks after reopening the economy, mall traffic had only recovered to 64 percent of its level before the outbreak. [77]

To better understand how growing economic activity—and attendant social interactions—might influence the pandemic, we also reviewed five studies that examined the relationship between social distancing and the spread of COVID-19. [78] The studies we reviewed highlight some suggestive evidence that increases in social distancing were associated with decreases in the spread of COVID-19. For example, one study of 211 U.S. counties found that a decrease in visits to nonessential businesses was associated with a decrease in overall COVID-19 transmission rates. [79] The ways in which economic activity and social interactions might influence the spread of COVID-19 could change over time as public health responses and individual behaviors evolve. Additional research could establish with greater confidence how increasing economic and social activity affect the spread of COVID-19.

Agency Comments

We provided the Department of Commerce (Commerce), the Department of Health and Human Services (HHS), the Department of Housing and Urban Development (HUD), the Department of Labor (Labor), the Department of Treasury (Treasury), the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Housing Finance Agency (FHFA), and the Office of Management and Budget (OMB) with a draft of this enclosure. FHFA, the Federal Reserve, and Treasury provided technical comments, which we incorporated as appropriate. Commerce, HHS, HUD, Labor, and OMB did not provide comments on this enclosure.

GAO’s Methodology

To identify indicators for monitoring the economy, we reviewed a number of sources, including prior GAO work, releases from federal statistical agencies, data from Fannie Mae and Freddie Mac, information from the Federal Reserve, and relevant federal agencies responsible for the pandemic response and oversight of the health care system, data available on the Bloomberg Terminal, and input from internal GAO experts. We assessed the reliability of the data we intend to use for monitoring and reporting on areas of the economy supported by the federal pandemic response, in particular the COVID-19 relief laws. We took a number of steps to determine the reliability of proposed data sources and indicators, including reviewing relevant documentation, reviewing prior GAO work, and interviewing data providers. Collectively, the indicators were sufficiently reliable to provide a general sense of how these areas of the economy are performing.

For our review of empirical research, we considered studies from COVID-19 economic working paper series published from March 2020 through August 2020, and conducted keyword searches in various databases, including Proquest, EBSCO, Scopus, and DIALOG.[80] We started our review of abstracts with over one thousand economic papers related to COVID-19 and selected 59 studies within our scope for further review. We then conducted in-depth reviews and selected empirical academic papers that were retrospective in nature, based on sufficiently reliable data sources and that used rigorous statistical methods. We focused primarily on studies that analyzed the U.S. but also reviewed studies that analyzed countries in Europe and Asia. Ultimately we included 20 studies in our literature review and recorded the studies’ data, methodology, assumptions, key findings, and limitations and used this information to summarize relevant researching findings. We also reviewed five peer reviewed journal articles on the impact of social distancing—U.S.-based studies, or studies that included U.S.-specific results—that we identified in a nonsystematic search of the literature.

Studies included in our literature review

Abouk, R., and B. Heydari. “The Immediate Effect of COVID-19 Policies on Social Distancing Behavior in the United States.” SSRN Working Paper (2020).

Allcott, H., L. Boxell, J. Conway, B. Ferguson, M. Gentzkow, and B. Goldman. “Economic and Health Impacts of Social Distancing Policies during the Coronavirus Pandemic.” SSRN working paper (2020).

Balla-Elliott, D., Z. Cullen, E. Glaeser, M. Luca, and C. Stanton. “Business Reopening Decisions and Demand Forecasts During the COVID-19 Pandemic.” Harvard Business School Working Paper 20-132 (2020).

Bartik, A., M. Bertrand, F. Lin, J. Rothstein, and M. Unrath. “Measuring the Labor Market at the Onset of the COVID-19 Crisis.” NBER Working Paper No. 27613 (2020).

Brzezinski, A., G. Deiana, V. Kecht, and D. V. Dijcke. “The COVID-19 Pandemic: Government versus Community Action across the United States.” Covid Economics. CEPR Press. Issue 7 (2020).

Chen, S., D. Igan, N. Pierri, and A. F. Presbitero. “Tracking the Economic Impact of COVID-19 and Mitigation Policies in Europe and the United States.” IMF Research (2020).

Chetty, R., J. Friedman, N. Hendren, M. Stepner, and the Opportunity Insights Team. “The Economic Impacts of COVID-19: Evidence from a New Public Database Built from Private Sector Data.” Working Paper (2020).

Cronin, C., and W. Evans. “Private Precaution and Public Restrictions: What Drives Social Distancing and Industry Foot Traffic in the COVID-19 Era?” NBER Working Paper No. 27531 (2020).

Elenev, V., L. Quintero, A. Rebucci, and E. Simeonova. “Staggered Adoption of Nonpharmaceutical Interventions to Contain COVID-19 across U.S. Counties: Direct and Spillover Effects.” SSRN Working Paper (2020).

Engle, S., J. Stromme, and A. Zhou. “Staying at Home: Mobility Effects of Covid-19.” Covid Economics. CEPR Press. Issue 4 (2020).

Goolsbee, A., and C. Syverson. “Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020.” NBER Working Paper No. 27432 (2020).

Gupta, S., T. Nguyen, F. L. Rojas, S. Raman, B. Lee, A. Bento, K. Simon, and C. Wing. “Tracking Public and Private Responses to the COVID-19 Epidemic: Evidence from State and Local Government Actions.” NBER Working Paper No. 27027 (2020).

Gupta, S., K. Simon, and C. Wing. “Mandated and Voluntary Social Distancing during the COVID-19 Epidemic.” Brookings Papers on Economic Activity. BPEA Conference Drafts (2020).

He, C., T. Wang, X. Luo, Z. Luo, J. Guan, H. Gao, K. Zhu, L. Feng, Y. Xu, Y. Cheng, and Y. J. Hu. “Surviving COVID-19: Recovery Curves of Mall Traffic in China.” SSRN Working Paper (2020).

Holtz, D., M. Zhao, S. Benzell, C. Cao, M. A. Rahimian, J. Yang, J. Allen, A. Collis, A. Moehring, T. Sowrirajan, D. Ghosh, Y. Zhang, P. S. Dhillon, C. Nicolaides, D. Eckles, and S. Aral. “Interdependence and the Cost of Uncoordinated Responses to COVID-19.” Proceedings of the National Academy of Sciences of the United States of America. (PNAS) (2020).

Maloney, W., and T. Taskin. “Determinants of Social Distancing and Economic Activity during Covid-19: A Global View.” Covid Economics. CEPR Press. Issue 13 (2020): pp. 157 – 177.

Nguyen, T., S. Gupta, M. Andersen, A. Bento, K. Simon, and C. Wing. “Impacts of State Reopening Policy on Human Mobility.” NBER Working Paper No. 27235 (2020).

Porcher, S., and T. Renault. “Social Distancing Beliefs and Human Mobility: Evidence from Twitter.” arXiv: 2008.04826v1 (2020).

Sears, J., J. M. Villas-Boas, V. Villas-Boas, S. B. Villas-Boas. “Are We #Stayinghome to Flatten the Curve?” University of California, Berkeley. Department of Agricultural & Resource Economics. CUDARE Working Papers (2020).

Sheridana, A., A. L. Andersen, E. T. Hansen, and N. Johannesen. “Social Distancing Laws Cause Only Small Losses of Economic Activity during the COVID-19 Pandemic in Scandinavia.” Proceedings of the National Academy of Sciences of the United States of America (PNAS). Vol. 117. No. 34, (2020): pp.1-6.

Contact information: Lawrance L. Evans, Jr., (202) 512-8678, evansl@gao.gov

Recent GAO work on COVID-19 data issues

COVID-19: Data Quality and Considerations for Modeling and Analysis. GAO-20-635SP. Washington, D.C.: July 30, 2020.

Relief for Health Care Providers

To help support health care providers and finance care for COVID-19 patients and underserved populations, the Department of Health and Human Services has disbursed about $101 billion (58 percent) of $175 billion appropriated by COVID-19 relief laws for the Provider Relief Fund, as of September 30, 2020. It also loaned about $106.5 billion to health care providers through a program expanded by the CARES Act.

Entities involved: Department of Health and Human Services, including its Centers for Medicare & Medicaid Services and Health Resources and Services Administration

Key Considerations and Future GAO Work

As the Department of Health and Human Services (HHS) works to get funds to eligible providers, it will continue to be important that robust internal controls are in place to help ensure funds are appropriately disbursed and used, notwithstanding the imperative of a quick federal response to the COVID-19 crisis. We plan to conduct additional work to examine HHS’s efforts to provide assistance to providers.

Background

Provider Relief Fund. To respond to the pandemic, the COVID-19 relief laws appropriated $175 billion to reimburse eligible providers for health-care-related expenses or lost revenues attributable to COVID-19, known as the Provider Relief Fund. Specifically, the CARES Act appropriated $100 billion and the Paycheck Protection Program and Health Care Enhancement Act appropriated an additional $75 billion for the fund.[81] The Health Resources and Services Administration (HRSA), within HHS, administers payments from the Provider Relief Fund.

Accelerated and Advance Payments Program. HHS’s Centers for Medicare & Medicaid Services’ (CMS) Accelerated and Advance Payments Program provides loans to providers and suppliers when there is a disruption in claims submission or processing, including during a public health emergency or a presidentially-declared disaster.[82] Section 3719 of the CARES Act authorized the expansion of this program due to the COVID-19 pandemic. Under the expanded program, active Medicare providers and suppliers could apply for loans of up to 100 percent or 125 percent of the Medicare payments they received for a prior 3-month or 6-month period, depending on the type of provider or supplier. On April 26, 2020, CMS announced that provider applications for the Advance Payments Program were discontinued in light of grant payments made available for similar purposes through the Provider Relief Fund. The Accelerated Payments Program was discontinued on October 8, 2020.

Overview of Key Issues

Provider Relief Fund. As of September 30, 2020, HHS had allocated about $145 billion from the Provider Relief Fund, with about $30 billion not yet allocated.[83] Of the total allocated ($145 billion), about $101 billion had been disbursed and about $44 billion was yet to be disbursed.[84] According to HHS officials, the agency allocated $88 billion for general relief for health care providers and about $56 billion for seven targeted areas. See table below for a summary of Provider Relief Fund allocations and disbursements.
Summary of the Provider Relief Fund ($175 billion) Allocations and Disbursements, as of September 30, 2020

Description

Allocation
($ billions)

Dates of initial
disbursement

Disbursement
($ billions)

General distributions

Phase I: Medicare

47.0

April 10, 2020

42.768

Phase II: Medicaid and Children’s Health

Insurance Program (CHIP) providers

15.0

July 3, 2020

2.249

Phase II: dental providers

3.0

July 28, 2020

0.878

Phase II: assisted living facilities

3.0

September 25, 2020

0.01

Phase III: general distribution

20.0

Subtotal of general distributions

88.0

45.905

Targeted distributions

Rural health care facilities

11.3

May 6, 2020

11.109

High-impact hospitals

22.0

May 7, 2020

20.921

Skilled nursing facilities

4.9

May 22, 2020

4.772

Indian health care providers

0.5

May 29, 2020

0.494

Safety net hospitals

13.3

June 12, 2020

13.095

Children’s hospitals

1.4

August 20, 2020

0.963

Nursing home infection control, quality, and performance

2.5

August 27, 2020

2.469

Subtotal of targeted distributions

55.9

53.823

Subtotal of general and targeted distributions

143.9

99.728

Other

Administration

0.142

0.009

Uninsured treatmenta

0.896

May 15, 2020

0.896

Unallocated funds/uninsured treatmentb

30.1

Total

175.0

100.633
Source: Summary of Health and Human Services funding data. | GAO-21-191

aThe total amount that will be allocated for uninsured treatment is unspecified. As of September 30, 2020, $0.896 billion had been allocated and disbursed for uninsured treatment.
bHealth Resources and Services Administration (HRSA) officials told us that the amount of unallocated funds/uninsured treatment is available for treatment of the uninsured and for future allocations. HRSA did not specify the amount available for each purpose.

Summary of fund disbursements. As of September 30, 2020, about $101 billion of the approximately $145 billion allocated from the Provider Relief Fund had been disbursed to providers. The amount disbursed was less than the amount allocated because some of the disbursements were in progress and HRSA told us that providers had declined about $5 billion so far from previous disbursements; those funds are available for subsequent allocations. HRSA told us that the returned funds are not reflected in the above table. According to our analysis of information provided by HRSA, as of September 30, 2020, HHS had disbursed about $46 billion from general distribution allocations and about $54 billion from the targeted allocations.

Many health systems are structured such that a single health system could be eligible for multiple allocations, such as the rural health disbursement and the skilled nursing disbursements. Consequently, many providers received funds from multiple different allocations. For example, one large health system received payments from 11 of the 13 distribution categories resulting in about $423 million in total payments to this system. A health system in New York received more than $1.2 billion in payments from 8 allocations. Similarly, a community hospital in Indiana received two payments from the general distribution and a rural health distribution which, when combined, amounted to about $5.7 million.

On October 1, 2020, HHS announced it planned to disburse $20 billion in a new general distribution (Phase III) of the Provider Relief Fund. Health care providers eligible to apply for these funds include providers who previously were eligible to receive funding from the Provider Relief Fund, as well as previously ineligible providers, such as those who began practicing in 2020, and an expanded group of behavioral health providers. (See our enclosure on Behavioral Health.) Providers had from October 5, 2020, to November 6, 2020, to apply for the Phase III General Distribution funds.

Provider Relief Fund reporting requirements. According to HRSA guidance issued on October 22, 2020, Provider Relief Fund recipients receiving more than $10,000 will be required to submit documents to substantiate that funds they received were 1) used for increased health care-related expenses or lost revenue attributable to COVID-19 and 2) were not reimbursed from another source.[85] Such providers must report use of the funds disbursed in 2020 starting January 15, 2021, with a first reporting deadline on February 15, 2021, and a final deadline of July 31, 2021, for providers who did not fully spend funds prior to December 31, 2020. For all payments received, regardless of the disbursement amount, the provider must abide by the disbursement-specific terms and conditions and be able to meet the Provider Relief Fund reporting requirements that document how the funds were used to meet the Provider Relief Fund statutory mandates. If the provider subsequently determines it cannot meet the terms and conditions for the respective disbursement and/or cannot meet the reporting requirements, the provider must return the funds.

According to the guidance, providers are required to document health care-related expenses attributable to COVID-19 that another source has not reimbursed and is not obligated to reimburse. Payment amounts not fully expended on health care expenses attributable to COVID-19 are then applied to lost revenues, represented as negative changes in year-over-year, actual revenue from patient care-related sources net of health care-related expenses attributable to COVID-19. Recipients may apply Provider Relief Fund payments toward lost revenue, the difference between their 2019 and 2020 actual patient care revenue.

HRSA told us that if a provider received funding but is subsequently identified to be ineligible, such as having been terminated from participation in Medicare, HRSA will send a notification letter (referred to as a Debt Demand letter) to the provider requesting the provider return the Provider Relief Funds. If the provider does not return the funds in response to the Debt Demand letter, then HRSA will refer the debt to the Program Support Center, which has the authority to collect the funds themselves or with the aid of the Department of the Treasury and the Department of Justice.

Accelerated and Advance Payments Program. Under the expanded Accelerated and Advance Payments Program, amended by the CARES Act, CMS made accelerated and advance payments totaling about $106.5 billion as of October 8, 2020. The preponderance of the programs’ loans ($78.4 billion) went to short-stay hospitals. Skilled nursing facilities borrowed $3.2 billion and critical access hospitals, $2.6 billion.[86] In total, Medicare Part B providers and suppliers received $8.5 billion, about 8 percent of the total amount advanced by CMS. Overall, 25 hospitals or health systems borrowed more than $250 million each. The largest accelerated payment, about $990 million, went to a health care organization based in California.

Initially, recoupment of the accelerated and advance payments, through the offsetting of new Medicare claims, was to begin not more than 120 days after the funds were disbursed and continue for 3 or 8 months, depending on the type of provider or supplier. Thus, recoupment was scheduled to begin in late July 2020. However, the Continuing Appropriations Act, 2021 and Other Extensions Act included a provision that delayed repayment until 1 year after the accelerated or advance payment was made, with recoupment of Medicare payments owed to providers beginning at 25 percent for the first 11 months, and at 50 percent for the following 6 months.[87] The provision also allows 29 months from the date of the first payment to a provider or a supplier before requiring the outstanding balance be paid in full.

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) with the draft of this enclosure. HHS provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Methodology

To conduct our work, we examined publicly released HHS information, and obtained information from CMS and HRSA in the form of written responses to questions, documents, and datasets. Our review of the data sources we used provides reasonable assurance of the data’s reliability.

Contact information: James Cosgrove, (202) 512-7114, cosgrovej@gao.gov

Nursing Homes

Nursing homes continue to face COVID-19 challenges, including those related to testing, restrictions on nursing home visitors, personal protective equipment shortages, and staffing shortages.

Entities involved: Centers for Disease Control and Prevention and Centers for Medicare & Medicaid Services, both within the Department of Health and Human Services.

Recommendation for Executive Action

We are making the following recommendation to the Administrator of the Centers for Medicare & Medicaid Services:

The Administrator of the Centers for Medicare & Medicaid Services should quickly develop a plan that further details how the agency intends to respond to and implement, as appropriate, the 27 recommendations in the final report of the Coronavirus Commission on Safety and Quality in Nursing Homes, which the Centers for Medicare & Medicaid Services released on September 16, 2020. Such a plan should include milestones that allow the agency to track and report on the status of each recommendation; identify actions taken and planned, including areas where the Centers for Medicare & Medicaid Services determined not to take action; and identify areas where the agency could coordinate with other federal and nonfederal entities.

Key Considerations and Future GAO Work

In September 2020, we recommended that the Secretary of Health and Human Services, in consultation with the Centers for Medicare & Medicaid Services (CMS) and the Centers for Disease Control and Prevention (CDC), develop a strategy to capture more complete data on confirmed COVID-19 cases and deaths in nursing homes retroactively back to January 1, 2020, and to clarify the extent to which nursing homes have reported data before May 8, 2020. We recommended that this strategy to capture more complete data should, to the extent feasible, incorporate information nursing homes previously reported to the CDC or to state or local public health offices.

The Department of Health and Human Services (HHS) partially agreed with this recommendation by noting the value of having complete data, but expressed concern about the burden of collecting it. As of October 23, 2020, no specific actions have been taken by HHS, though the department indicated that it continues to consider how to implement this recommendation. We maintain the importance of collecting these data to inform the government’s continued response and recovery, and we believe that HHS could ease the burden by incorporating data previously reported to CDC or to state or local public health offices.

Since September 2020, we have identified new concerns related to the completeness of HHS’s response to the recommendations of the Coronavirus Commission on Safety and Quality in Nursing Homes (which we refer to as the Nursing Home Commission); to CMS’s initiative to provide nursing homes with antigen diagnostic tests for COVID-19, which have been underutilized by nursing homes; and to restrictions on nursing home visitors, which have negatively affected residents’ mental and physical health. In addition, we have ongoing concerns with testing, personal protective equipment (PPE), and staffing shortages in nursing homes that we will continue to examine in future reports. We also have ongoing work on oversight of infection prevention and control and emergency preparedness in nursing homes.

Background

The health and safety of the 1.4 million elderly or disabled residents in the nation’s more than 15,000 Medicare- and Medicaid-certified nursing homes—who are often in frail health and living in close proximity to one another—has been a particular concern during the COVID-19 pandemic.[88] CMS, an agency within HHS, is responsible for ensuring that nursing homes meet federal quality standards to participate in the Medicare and Medicaid programs. To monitor compliance with these standards, CMS enters into agreements with state survey agencies in each state government to conduct inspections, including recurring comprehensive standard surveys and as-needed investigations.

Congress appropriated $100 million in the CARES Act for this oversight, and it directed CMS to prioritize the use of funds for nursing home facilities in localities with community transmission of COVID-19.[89] According to CMS, of this amount, the agency plans to provide state survey agencies approximately $81 million through September 30, 2023, to be used to ensure that all nursing homes receive targeted infection control surveys, among other things.[90] According to CMS, it has set aside the remaining $19 million to enhance survey system technology, to fund PPE for federal surveyors, and to implement improvements recommended by the Nursing Home Commission. In addition, HHS announced in May that it would contribute $4.9 billion from the Provider Relief Fund, established with funds provided under the CARES Act, as direct payments to assist nursing homes with responding to COVID-19. In July, HHS announced that it would provide an additional $5 billion from the fund.

In response to the pandemic, HHS, primarily through CMS and CDC, has taken a range of actions to address infection prevention and control in nursing homes, which we reported on in our June and September 2020 reports. These actions include providing guidance and technical assistance to nursing homes to improve infection control practices and shifting to targeted infection control surveys of nursing homes.[91]

Overview of Key Issues

COVID-19 cases and deaths in nursing homes. According to CDC case-reporting data, as of October 4, 2020, about 91 percent of Medicare- and Medicaid-certified U.S. nursing homes had reported at least one confirmed resident or staff case, and about 46 percent had reported at least one resident or staff COVID-19 death.[92] Also as of October 4, nursing homes had cumulatively reported a total of 252,785 resident and 206,052 staff confirmed cases of COVID-19, along with 59,576 resident and 954 staff deaths as a result of the virus—about 29 percent of the total COVID-19 deaths across the U.S. (208,821 as of October 4, as reported by CDC).

Examining the data over time, for the weeks ending May 31 to October 4, there have been fluctuations in new weekly confirmed cases and deaths, with both decreasing slightly in June, increasing to a peak in the week ending July 26, at 11,872 resident and 11,875 staff confirmed cases, and then gradually decreasing through the end of September.[93] (See figure.) Combined nursing home resident and staff deaths from COVID-19, as a percentage of total COVID-19 deaths in the U.S., remained largely unchanged throughout this time period (increasing slightly from about 28 percent on May 31 to about 29 percent on October 4), indicating that the changing weekly COVID-19 death counts in nursing homes paralleled changes in the country as a whole.

Weekly Confirmed COVID-19 Cases and Deaths among U.S. Nursing Home Residents and Staff, as Reported by Medicare- and Medicaid-Certified Nursing Homes, Weeks Ending May 31, 2020 through October 4, 2020

Notes: Dates refer to the end of a week (e.g., May 31 refers to the entire week from May 25 through May 31).
We excluded data for the week ending May 24, 2020 because it is the first week for which data are available from the Centers for Disease Control and Prevention (CDC) and could include cases and deaths from multiple weeks dating back to January 1, 2020.
Weekly and cumulative case and death counts are likely underreported because they do not include data for the nursing homes that did not report COVID-19 data to CDC for that week or from nursing homes that submitted data that failed data quality assurance checks. Additionally, as we reported in September, the Centers for Medicare & Medicaid Services (CMS) does not require nursing homes to report data prior to May 2020, although nursing homes may do so voluntarily. We recommended that the Secretary of Health and Human Services—in consultation with CMS and CDC—develop a strategy to capture more complete data on confirmed COVID-19 cases and deaths in nursing homes retroactively to January 1, 2020.
Weekly staff deaths reported for the weeks ending May 31 through October 4 ranged from 19 (week ending September 20) to 68 (week ending May 31).

Results from required targeted infection control surveys. State survey agencies have been conducting targeted infection control surveys and high-priority complaint investigations in nursing homes rather than traditional comprehensive standard surveys and lower priority complaint investigations since March.[94] According to CMS, as of September 30, 2020, 15,351 nursing homes (100 percent) nationwide had received a targeted infection survey or high-priority complaint investigation.

In our review of the survey results, we found that about 5 percent of the nursing homes (742 out of 14,232 homes) receiving targeted infection control surveys or high priority complaint investigations from March 4 through August 31, 2020, had infection control deficiencies.[95] Examples of the infection control deficiencies cited included lack of, or incorrect use of, PPE; challenges related to identifying and isolating residents diagnosed with COVID-19; and staffing shortages. About 90 percent of the infection control deficiencies from the targeted infection control surveys were classified by surveyors as not severe, meaning the surveyor determined that residents were not harmed, but the potential for harm existed based on the facility’s practices; nearly all of the remaining deficiencies were classified as presenting immediate jeopardy to resident health or safety. On August 17, CMS authorized traditional comprehensive standard surveys and lower-priority complaint investigations to resume as soon as state survey agencies have the resources, such as staff and PPE.[96]

Nursing Home Commission report. In June 2020, CMS announced the establishment of the Nursing Home Commission, consisting of 25 members representing nursing home residents, owners, and administrators; consumer advocates; infectious disease experts; academics; state authorities; and others. The Nursing Home Commission was tasked with conducting a comprehensive and independent assessment of the response to the COVID-19 pandemic in nursing homes and delivering a report to CMS in early fall 2020. CMS has said the purpose of the report is to inform immediate and future responses to COVID-19 in nursing homes. CMS released the Nursing Home Commission’s final report in September 2020, which includes 27 recommendations organized under 10 themes—such as Testing and Screening, Equipment and PPE, and Visitation—that are paired with over 100 specific action steps for CMS.[97]

CMS released a response to the report broadly outlining the actions that the agency has taken to date as part of its response to the COVID-19 pandemic, but the agency has not provided an implementation plan that would allow it to track and report progress toward the Nursing Home Commission’s recommendations. According to agency officials, the response released on September 16, 2020, represents the majority of the efforts that CMS plans to undertake to address the recommendations. However, as we describe later in this enclosure, CMS has not fully addressed the Nursing Home Commission’s recommendations.

While CMS may not be obligated to implement all of the Commission’s recommendations, the response the agency released does not indicate disagreement with any of the recommendations or indicate areas where the agency does not plan to take action. CMS officials also stated that some of the recommendations are outside of CMS’s authority and would be better addressed by other federal and nonfederal stakeholders. However, as the lead federal agency for nursing home quality and safety, CMS has an important role in coordinating with stakeholders, especially given that the agency established the Nursing Home Commission and that CMS’s role in coordinating with federal, state, and other long-term care stakeholders was directly specified in multiple Nursing Home Commission recommendations.

As we have previously reported, fully implementing agency reform efforts, including efforts to streamline and improve the effectiveness of government operations, requires careful and close management, such as the development of an implementation plan with key milestones and deliverables to track implementation progress.[98] Successful reforms require an integrated approach that involves key stakeholders, and it is important for agencies to directly and continuously involve these key stakeholders—such as other federal partners and state and local governments—in the development of reform.

Further, standards for internal control state that management should communicate the necessary quality information externally to achieve the entity’s objectives and address related risks.[99] By developing an implementation plan that includes milestones and deliverables, and that tracks and reports the actions taken—including areas where CMS has determined not to take action—on the Nursing Home Commission’s recommendations, CMS could better inform its response, and that of other key stakeholders, to COVID-19 in nursing homes.

Challenges meeting testing requirements. In September 2020, HHS, through CMS, began requiring nursing homes to test all staff and residents for COVID-19 as part of its requirements for the Medicare and Medicaid programs.[100] According to CDC data, as of October 4, about 52 percent of nursing homes self-reported that they had tested both staff and residents in the prior week, while about 25 percent reported testing staff only and about 3 percent reported testing residents only. The number of nursing homes testing for COVID-19 has increased since the week ending August 16, the first week for which testing data were available, when about 35 percent of nursing homes reported testing both residents and staff in the prior week, about 13 percent reported testing staff only, and about 9 percent reported testing residents only.

For the week ending October 4, about 200 nursing homes (about 1 percent) reported that they would be unable to test all staff or residents within the next week, if needed, due to issues such as a lack of supplies and lack of access to a laboratory. This is an improvement from the week ending August 16, the first week for which testing data were available, when about 1,000 nursing homes (about 7 percent) reported that they would be unable to test all staff within the next week, if needed, and about 900 nursing homes (about 6 percent) reported that they would be unable to test all residents. (For more information on testing for COVID-19, see our COVID-19 Testing Guidance enclosure.)

National provider association officials we interviewed said that some nursing homes were challenged to implement a testing program within the short time frames allowed by the requirements, especially in states that had not previously prioritized testing. Additionally, provider association officials and researchers we interviewed expressed concern about nursing homes being able to pay for additional testing supplies after using up supplies provided by the federal government and state governments, with officials noting that routine staff testing is not reimbursed by insurance.

Challenges with utilization of HHS tests and testing instruments. Since July 2020, HHS has procured and distributed antigen diagnostic tests and associated point-of-care (POC) testing instruments to nursing homes in COVID-19 hotspots across the country.[101] From July through September, the agency distributed two types of antigen POC testing systems, and, as of September 29, 2020, HHS reported that 13,850 nursing homes had received about 14,000 of these testing instruments and approximately 4.9 million associated tests.[102] Then, beginning in September, HHS began to distribute a third type of antigen POC testing system to nursing homes. According to HHS, as of the week ending October 17, 2020, over 5.2 million of these tests had been distributed to nursing homes.

Antigen tests are a new development in nursing homes’ ability to test for COVID-19, as molecular tests were the only diagnostic test available for the first months of the pandemic. The antigen tests provided by HHS can produce results within approximately 15 minutes, which can be significantly faster than waiting for results from molecular tests, which rely on polymerase-chain reaction technology and typically must be processed in a laboratory.[103] The ability to receive test results in a timely manner is important so that nursing homes can quickly identify and separate residents and staff infected with COVID-19 and limit the spread of the disease. This is particularly true of identifying asymptomatic carriers of the disease, who may show no symptoms. However, there may also be risks associated with the use of antigen testing; according to the Food and Drug Administration (FDA), antigen tests have a higher chance of false negatives compared to molecular tests.[104]

While the federally provided antigen diagnostic tests and testing instruments could help address nursing homes’ previously noted challenges obtaining testing supplies and receiving results in a timely manner, CDC data indicate that many nursing homes are not yet utilizing these tests and testing instruments. Specifically, as of the week ending October 4, 2020, about 51 percent of nursing homes had reported to CDC that they had ever used a POC test for residents or staff.[105] About 15 percent of nursing homes reported that they did not have a POC testing system available, and about 34 percent reported that they had a POC testing system but had not used it to test residents or staff. During the period for which testing data are available, the number of homes that reported ever having tested using the POC testing system was about half the number that reported any form of testing, indicating that many homes doing testing were still relying on molecular testing.[106]

As we describe in our Testing Guidance enclosure in this report, some stakeholder groups and an expert we interviewed attributed this to confusion about how to use the new antigen tests, especially with regard to interpreting and reporting the results. See our Testing Guidance enclosure for more information.

Challenges with restrictions on nursing home visitors. From March through September 2020, CMS restricted visitors and non-essential health care personnel in nursing homes, except in certain compassionate care situations, to reduce the transmission of COVID-19.[107] According to national association officials and a researcher we interviewed, this restriction of visitors has limited oversight of facilities through the exclusion of resident advocates, such as family members and ombudsmen, and has negatively affected residents’ mental and physical health.[108] The Nursing Home Commission made four recommendations related to visitation, including that CMS streamline and consolidate visitation directives, guidance, and resources and help nursing home staff assess and improve residents’ mental health generally, including after the pandemic.

In response to the Nursing Home Commission’s visitation recommendations, CMS pointed to, among other things, its visitation guidance, which was issued on September 17. This new guidance allows nursing homes to resume visitations depending on the degree of community spread and requires that these visitations be conducted according to a nursing home’s structure and resident needs.[109] The guidance provides various ways a nursing home can safely facilitate in-person visitation to address the psychosocial needs of residents. For example, it notes that outdoor visits are preferred due to the reduced risk of transmission, recommends limits on the number of visitors, and recommends that visitors be tested for COVID-19 prior to visiting. Although this guidance generally addresses one of the Nursing Home Commission’s four visitation recommendations, including most of the related action steps, more work remains to address the other three recommendations. Additionally, while allowing visitors in nursing homes will likely have positive impacts on the mental and physical health of nursing home residents, it raises new challenges in light of existing shortages of testing supplies, PPE, and available staff, all of which are needed to ensure that visits are conducted safely.

PPE challenges persist. The percentage of nursing homes experiencing PPE shortages decreased from when we reported in September, but shortages remain an issue.[110] According to data nursing homes self-reported to CDC, as of October 4, about 15 percent of nursing homes (a decrease of 7 percentage points) did not have a one-week supply of at least one of the following: N95 respirators, surgical masks, gloves, eye protection, or gowns.[111] Of these, N95 respirators were the most needed, with about 12 percent of nursing homes (a decrease of 5 percentage points) reporting they did not have a one-week supply, followed by surgical gowns (about 9 percent of nursing homes, a decrease of 3 percentage points).

This lack of PPE is particularly challenging because nursing home staff are required to wear adequate PPE when collecting specimens for required resident and staff COVID-19 testing, in addition to having adequate supplies of PPE for ongoing resident care. The Nursing Home Commission made three recommendations related to PPE, including that CMS assume responsibility for a collaborative process—with federal, state, local, tribal, and territorial government partners—to ensure that nursing homes can procure and sustain a 3-month supply of high-quality PPE, and that CMS collaborate with other federal and state agencies to provide additional PPE guidance.[112]

Staffing challenges persist. The percentage of nursing homes experiencing staffing shortages did not improve from when we reported in September.[113] According to data nursing homes self-reported to CDC, as of October 4, about 19 percent of nursing homes had a shortage of aides (an increase of 1 percentage point), about 16 percent had a shortage of nursing staff (unchanged), about 10 percent had a shortage of other staff (an increase of 1 percentage point), and about 2 percent had a shortage of clinical staff (unchanged).[114]

In addition, required routine testing of staff in nursing homes could exacerbate existing staffing shortages as new cases of COVID-19 are identified and affected staff are unable to work. The Nursing Home Commission made nine recommendations related to the nursing home workforce, including short-term solutions, such as that CMS assess how federal relief funds could be used for hazard pay, and long-term solutions, such as increasing wages for nursing home staff, through Medicare and Medicaid payment reform, to disincentivize staff from working for multiple employers.[115]

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS provided general comments, which are reproduced in Appendix IV. In its comments, HHS neither agreed nor disagreed with our recommendation to quickly develop a plan that further details how the agency intends to respond to and implement, as appropriate, the recommendations in the Nursing Home Commission’s final report. HHS officials highlighted actions that CMS has taken related to Commission recommendations and said it would refer to and act upon the Commission’s recommendations, as appropriate. We maintain that developing a plan that details how CMS will proceed with remaining recommendations, includes milestones, and demonstrates coordination with other federal and nonfederal stakeholders would improve CMS’s ability to systematically consider the Commission’s recommendations going forward.

HHS also provided technical comments, which we incorporated as appropriate. OMB did not have comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed CMS and CDC data, agency guidance, the Nursing Home Commission final report, and other relevant information on HHS’s response to the COVID-19 pandemic. We also spoke to CMS and CDC officials, as well as representatives from national organizations representing nursing homes, residents, and their families, and researchers with experience in nursing home infection control.

In addition, we analyzed CMS data on targeted infection control surveys and complaint investigations conducted in nursing homes, which included data from March 4, 2020 through August 31, 2020, and CDC data on COVID-19 reported by nursing homes for the week ending October 4, 2020.[116] We analyzed the CDC data as they were reported by nursing homes to CDC and publicly posted by CMS.

We did not otherwise independently verify the accuracy of the information with these nursing homes. We assessed the reliability of the data sets used in our analyses by checking for missing values and obvious errors and reviewing relevant CMS and CDC documents. We determined the data were sufficiently reliable for the purposes of our reporting objective.

Contact information: John E. Dicken, (202) 512-7114, dickenj@gao.gov

Related GAO Products

Infection Control Deficiencies Were Widespread and Persistent in Nursing Homes Prior to COVID-19 Pandemic. GAO-20-576R. Washington, D.C.: May 20, 2020.

Science & Tech Spotlight: COVID-19 Testing. GAO-20-584SP. Washington, D.C.: May 20, 2020.

Nursing Homes: Better Oversight Needed to Protect Residents from Abuse. GAO-20-259T. Washington, D.C.: November 14, 2019.

Strategic National Stockpile

The Department of Health and Human Services, in conjunction with federal partners, has taken steps to replenish and expand the portfolio of supplies in the Strategic National Stockpile to enable the Department to respond to a potential resurgence of COVID-19 and future public health emergencies.

Entities involved: Department of Defense; the Federal Emergency Management Agency, within the Department of Homeland Security; and the Office of the Assistant Secretary for Health and the Office of the Assistant Secretary for Preparedness and Response, within the Department of Health and Human Services.

Key Considerations and Future GAO Work

In June 2020, we reported that the Administration planned to restructure the Strategic National Stockpile (SNS), overseen by the Department of Health and Human Services’ (HHS) Office of the Assistant Secretary for Preparedness and Response (ASPR), based on lessons learned from recent pandemics, including COVID-19.

In September 2020, we reported on some of these restructuring plans, including efforts to build a 90-day supply of certain key items. We found that ASPR had made progress in meeting the agency’s goal of building a 90-day supply to prepare for potential surges in COVID-19 cases. In addition, we noted then that ASPR planned to add some materials, such as testing supplies, which had not been held in the SNS prior to COVID-19.

We also previously reported that the Food and Drug Administration had identified shortages of certain supplies, including personal protective equipment (PPE) and testing supplies, many of which the SNS is trying to acquire.[117] These shortages are expected to last for the duration of the pandemic, according to the Food and Drug Administration.

The continued need for supplies by state, tribal, and territorial governments, as well as point-of- care providers, such as nursing homes, combined with continued supply chain constraints may present challenges to ASPR in achieving its goal of building a 90-day supply by the end of 2020. ASPR has also begun other efforts to modernize the SNS to better position it to respond to future pandemics, according to agency officials. We will continue to monitor ASPR’s efforts, which are still in the early stages of development.

Background

We previously reported that the nationwide need for critical PPE and other supplies to protect responders and to treat individuals sickened with COVID-19 exceeded the quantity contained in the SNS. In March 2020, ASPR began distributing supplies from the SNS to states and other entities, and within 1 month, the inventory of requested supplies was largely exhausted.[118]

According to ASPR officials, the SNS was not designed or funded to provide states with supplies at the scale necessary to respond to a nationwide event such as the COVID-19 pandemic. However, in response to lessons learned thus far from the COVID-19 response, ASPR has begun efforts to reassess, replenish, and restructure the SNS. These efforts, referred to as “SNS 2.0: Next Generation,” are intended to create a modernized stockpile that will, among other things, ensure a sufficient reserve of all major items associated with COVID-19-like pandemics on a nationwide scale, according to ASPR’s website and other information regarding its modernization plans.

Although overall responsibility for modernizing the SNS belongs to ASPR, multiple federal agencies have contributed to these efforts. (See figure below.)
  • The Supply Chain Task Force, now known as the Supply Chain Advisory Group, was one of eight task forces run by the Unified Coordination Group.[119] This group was tasked with maximizing the nationwide availability of supplies needed for the COVID-19 response. This included providing advice on how the SNS could better position itself to respond to the ongoing pandemic and future pandemics.
  • The Department of Defense (DOD), including through its Joint Acquisition Task Force which became the Defense Assisted Acquisition Cell on September 30, 2020, executed multiple contracts on behalf of ASPR, including for the purchase of supplies to replenish the SNS.[120]
  • The Logistics, Supply Chain, Next Generation SNS Work Group, comprised of representatives from various federal agencies and the White House, was formed to develop and implement objectives and activities that would enable the SNS “to better protect the health and safety of the nation.” One area of focus for this group was determining and acquiring the critical items to hold in the SNS to enable it to respond to the needs of the nation in the event of a fall resurgence of COVID-19.

This work group was also responsible for determining inventory requirements and strategies to meet future surges in demand. Many of the objectives and activities outlined by this Work Group are still in progress although the Work Group itself no longer exists, according to ASPR officials.

Federal Entities Involved in Management of the Strategic National Stockpile (SNS) Supplies during the COVID-19 Pandemic

aThe White House Coronavirus Task Force, chaired by the Vice President, is responsible for coordinating a whole-of-government response to COVID-19.
bThe Secretary for Health and Human Services transferred the responsibility for the control and maintenance of the SNS from the Centers for Disease Control and Prevention to the Office of the Assistant Secretary for Preparedness and Response (ASPR) in October 2018. Allocation and distribution of supplies from the SNS at certain times during the COVID-19 pandemic were made by the UCG and implemented by ASPR’s Division of the SNS; however, ASPR always maintained control of the SNS, according to ASPR and Federal Emergency Management Agency officials. In addition, although the Department of Defense (DOD) made procurements to replenish the SNS and managed the awarded contracts, ASPR set the procurement requirements and provided funding, according to ASPR and DOD officials.

The four relief laws enacted to assist the COVID-19 response as of November 1, 2020, appropriated funding for HHS activities including, but not limited to, the SNS.[121] As of October 31, 2020, HHS reported it obligated $8.9 billion of the $10.7 billion it planned to use for the SNS to purchase PPE and ventilators for immediate use as well as to replenish SNS inventory, among other purposes, and had expended about $4.1 billion.

Overview of Key Issues

ASPR has made progress toward replenishing and expanding the SNS inventory despite facing challenges due to supply chain constraints. The agency and its federal partners identified the most critical types of supplies needed in the COVID-19 pandemic and developed a 90-day supply target for each type of item. ASPR’s progress in amassing 90 days of supplies varies by item as shortages of certain items—such as nitrile gloves—continue and other challenges affect progress.

ASPR anticipates that it will reach its 90-day supply inventory targets for many items by the end of the year. As ASPR moves towards completion of this immediate goal, it continues to address additional goals such as determining how to best manage the inventory to meet future surges in demand and the agency plans to add other supplies not previously held in the SNS.

Identification and acquisition of critical supplies for the SNS. ASPR and its federal partners determined the SNS needed to acquire a 90-day supply of three categories of critical supplies—PPE, pharmaceuticals, and testing supplies—based on requests received from states and other entities during the response effort and recommendations from the Supply Chain Advisory Group and the Office of the Assistant Secretary for Health (OASH), within HHS.

Depending on the item, officials with the Supply Chain Advisory Group, the Logistics, Supply Chain Next Generation SNS Work Group, or OASH developed 90-day targets for obtaining the three categories of critical supplies it identified. ASPR officials explained that 90 days is the amount of time manufacturers told them it would take to ramp up production of respiratory devices to meet surges in demand. Thus, having a 90-day supply in the SNS would enable it to serve as a short-term stop-gap buffer until the commercial supply chain can meet demand. ASPR’s progress towards acquiring these critical supplies at the target volume levels varies by item.

PPE. Based on input from the Supply Chain Advisory Group, ASPR decided to build a 90-day inventory of PPE to include the most requested PPE during COVID-19: gloves, N95 respirators, surgical and procedural masks, gowns and coveralls, and eye protection such as face shields, according to federal officials.

In September 2020, ASPR officials reported that with one exception, they had awarded contracts that would enable them to acquire a 90-day inventory of those PPE items by the end of 2020. Some of the contracts included a priority rating, which according to the Defense Production Act, requires a contractor to give preference to these contracts over any other unrated contracts if the contractor cannot meet all required delivery date needs for all contracts.[122]

In October 2020, ASPR officials told us that ASPR and DOD had awarded about $1.8 billion to acquire a 90-day inventory of PPE (ASPR awarded 13 contracts totaling about $606.8 million and DOD had awarded 29 contracts totaling about $1.2 billion). ASPR officials told us that a contract awarded by DOD for nitrile gloves was not fulfilled because the subcontractor sold them to another entity, but that DOD was continuing to work with the contractor to fill the order. According to ASPR officials, while this did not result in a loss of government funds, ASPR may not meet the 90-day supply target for gloves by the end of the year. ASPR officials told us they will continue to coordinate with DOD to acquire gloves, which continue to be in short supply. (See table below for more on the SNS’s inventory, before and during COVID-19, through October 2020.)
Strategic National Stockpile Personal Protective Equipment Inventory and Status of Contract Awards

Personal protective equipment

Status of contract awards as of Oct. 2020

Dec. 2019 inventory on handa

July 2020 inventory on hand

Oct. 2020 inventory on hand

Planned 90-day inventoryb

Gloves

16.9 million

1 million

2 million

4.5 billion

N95 respirators

12.6 million

38 million

107 million

300 million

Surgical or procedural masks

30.8 million

8 million

157 million

400 million

Gowns or coveralls

4.8 million

1.2 million

1 million

265 million

Eye protection or face shields

5.8 million

1.2 million

19 million

18 million
Legend:
● The Office of the Assistant Secretary for Preparedness and Response (ASPR) officials noted that they had awarded all contracts that will enable the Strategic National Stockpile (SNS) to meet the planned 90-day inventory targets.
◒ ASPR officials noted they had awarded some, but not all, contracts that would enable the SNS to meet the 90-day inventory targets.
Source: Officials with the Office of the Assistant Secretary for Preparedness and Response within the Department of Health and Human Services. | GAO-21-191

Note: The SNS continues to deploy supplies in response to requests and to certain health care providers, such as nursing homes. These deployments may affect the ability to reach the SNS inventory targets, according to ASPR officials. Deployments could also result in some fluctuation in inventory quantities over time.
aThe inventory on hand as of December 2019 was procured in response to the 2009 H1N1 pandemic, according to ASPR officials.
bThe 90-day supply inventory goals were established during the COVID-19 pandemic, according to ASPR officials.

Pharmaceuticals. ASPR and FEMA officials told us that the pandemic called attention to the need for the SNS to have in its inventory sedatives for use with ventilators, and other drugs, such as an antibiotic, not previously contained in the SNS. An initial set of these drugs were identified by the Supply Chain Advisory Group in consultation with various health care stakeholders, according to ASPR and FEMA officials. Later, HHS and the Supply Chain Advisory Group identified additional priority drugs. In total, the SNS is building an inventory of 21 finished pharmaceuticals.

In addition, ASPR plans to include 25 active pharmaceutical ingredients in the SNS inventory, although these products will be stored by the product vendor.[123] Below (figure) are groups of pharmaceutical products ASPR will include in its 90-day supply inventory based on their primary uses.

Primary Use of Pharmaceutical Products the Office of the Assistant Secretary for Preparedness and Response Will Include in the Strategic National Stockpile

ASPR officials told us the agency awarded all of the contracts needed to supply the SNS with these finished pharmaceuticals, and anticipated acquiring a 90-day supply of these drugs by the end of 2020. In October 2020, ASPR officials told us they had awarded seven contracts totaling $129.1 million for these supplies.

Additionally, according to ASPR officials in October 2020, the agency was evaluating technical proposals received in response to the agency’s solicitation for the production and storage of active pharmaceutical ingredients and planned to award contracts by the end of October 2020. ASPR officials told us that they intend to have an initial quantity of active pharmaceutical ingredients under the control of the SNS by the end of 2020; however, the amounts will be dependent on their availability and cost.[124] (See table below for more on the SNS’s contract awards and inventory through October 2020.)
Status of Strategic National Stockpile Pharmaceutical Contract Awards and Inventory

Pharmaceuticals

Dec. 2019 inventory on Hand

Status of contract awards to meet 90-day inventory as of Oct. 2020

Status of 90-day inventory as of Oct. 2020a

Finished pharmaceuticals
(21 products)

8 of 21 products stocked

Active pharmaceutical ingredients
(25 ingredients)b

0 of 25 ingredients stocked

Legend:
● Completed.
◒ Partially completed.
○ No contract awards made or no pharmaceutical products acquired.
Source: Officials with the Office of the Assistant Secretary for Preparedness and Response (ASPR) within the Department of Health and Human Services. | GAO-21-191

Note: The Strategic National Stockpile is building an inventory of pharmaceutical products in response to the COVID-19 pandemic: it will include 21 finished pharmaceuticals.
aThe 90-day supply inventory goals were established during COVID-19, according to ASPR officials.
bAn active pharmaceutical ingredient refers to any substance that is intended for incorporation into a finished pharmaceutical and is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body.

Testing supplies. HHS’s OASH, which leads federal efforts to support states in their COVID-19 testing plans and directs ASPR officials on the stockpiling of testing supplies, identified the need to build a 90-day supply of nasal swabs, transfer media, and pipette tips (disposable plastic attachments used to uptake and dispense small volumes of liquid) in the SNS. Prior to COVID-19, the SNS did not hold these testing supplies.[125] According to an OASH official with responsibility for testing supply acquisition, additional testing supplies may be added to the SNS in the future.

As of November 2020, ASPR had completed contract awards for some testing supplies. Specifically, at the direction of OASH, ASPR focused on acquiring swabs and transport media to fill states’ needs for these supplies. In November 2020, ASPR officials told us that they had awarded seven contracts and obligated about $122 million for the purchase of nasal swabs and transport media.[126] ASPR officials told us they distribute these supplies to states and other entities at the direction of OASH and any surplus is added to the SNS on a weekly basis.

Due to demand for these items, the SNS has been able to accumulate very little of these materials, according to ASPR officials. Because of recent increases in production, an OASH official told us that the SNS is projected to accumulate a 90-day supply of transport media by January 2021 and nasal swabs several months later. In contrast, this official noted the supply of pipette tips does not currently meet demand, so there is no excess supply to add to the SNS at this time. Moreover, this OASH official told us that due to the demand for pipette tips, the agency is currently airlifting this supply into the United States from overseas. Further, the official anticipated demand for pipette tips would continue to outpace supply and noted this anticipated demand indicated the need to stockpile pipette tips in the SNS in the future. (See the table below for more on the SNS’s inventory of testing supplies prior to, and during COVID-19, through October 2020.)
Strategic National Stockpile Testing Supply Inventory

Testing supplies

Dec. 2019 inventory on handa

Oct. 2020 inventory on hand

Planned 90-day inventoryb

Nasal swabs

N/A

18 million

54 million

Transport media

N/A

36 million

36 million

Pipette Tipsc

N/A

0

36 million
Source: Officials with the Office of the Assistant Secretary for Preparedness and Response (ASPR) and the Office of the Assistant Secretary for Health (OASH), within the Department of Health and Human Services, as well as Department of Health and Human Services, Report to Congress: COVID-19 Strategic Testing Plan (May 24, 2020). | GAO-21-191

Note: The Strategic National Stockpile continues to deploy supplies in response to requests and to areas of need such as nursing homes. These deployments may affect the ability to reach the SNS inventory targets, according to ASPR officials. Deployments could also result in some fluctuation in inventory quantities over time.
aTesting supplies were not stocked in the SNS prior to COVID-19.
b The 90-day supply inventory goals were established during COVID-19, according to ASPR officials.
cThe supply of pipette tips (disposable plastic attachments used to uptake and dispense small volumes of liquid) does not currently meet demand so there is no excess supply to add to the SNS at this time, according to an OASH official we spoke with in October 2020.

Planned acquisition beyond that identified for the 90-day SNS inventory. In addition to supplies ASPR and its federal partners identified for the 90-day inventory, ASPR intends to include other supplies not previously held in the SNS based on feedback ASPR received from states.[127] For example, ASPR officials told us they anticipated that oxygen tubes needed to operate ventilators would be readily available in hospitals and as a result, ASPR did not stockpile them or provide them to states when it distributed ventilators during COVID-19. However, ASPR found that states did not have these tubes and as a result, plans to stock these items in the SNS in the future.

ASPR is also procuring and bundling vaccine supplies into kits in conjunction with DOD in support of Operation Warp Speed.[128] Specifically, the SNS is working with the vendor who is performing several tasks such as assembling and storing a total of 6.7 million vaccination kits based on the requirements of any specific vaccine’s administration, since multiple vaccine candidates are in development.[129] For example, the vendor will assemble 5.6 million standard vaccination kits containing surgical masks, face shields, needles, and syringes to be distributed along with any COVID-19 vaccine. (See figure below.)

In addition, the vendor will assemble other types of vaccine administration kits based on the requirements for any specific vaccine’s administration, including pediatric populations and vaccines to be distributed in other dosage quantities, according to ASPR officials. In October 2020, ASPR officials told us that ASPR and DOD had awarded $675.2 million for the supplies, kit assembly, storage, and shipment of any COVID-19 vaccine (ASPR awarded four contracts totaling $438.4 million and DOD awarded nine contracts totaling $236.8 million).

Contents of One Type of Strategic National Stockpile COVID-19 Vaccination Kit That Supports 100 Vaccinations

Note: Each standardized kit, as depicted above, contains supplies to administer 100 vaccine doses. In addition to this type of vaccination kit, the Department of Health and Human Services (HHS), through its Strategic National Stockpile, has contracted for the assembly of other kits, such as to administer any vaccine to pediatric populations or for vaccines to be distributed in other dosage quantities, according to HHS officials.

Challenges in replenishing the SNS inventory. ASPR’s efforts to replenish the SNS inventory are affected by broader medical supply chain issues:
  • Delayed delivery to reduce commercial supply constraints. ASPR officials reported that they have delayed delivery of some contracted items to the SNS to enable manufacturers to make them available in the commercial market to alleviate supply constraints. For example, ASPR officials told us that they delayed delivery of N95 masks to the SNS to permit these materials to flow to commercial distributors and then to hospitals to support first-line needs.
  • Deployment of supplies to areas of need. For example, in August 2020, HHS announced it had released 1.5 million N95 respirators from the SNS for distribution to about 3,336 nursing homes that had less than a 3-day supply.[130]
  • Global competition for supplies. For example, ASPR officials told us that because the expected contract for nitrile gloves was not completed, they anticipated needing to acquire gloves incrementally through multiple contracts. As we previously reported, the speed at which ASPR will be able to build a 90-day supply of PPE will depend on demand that may be affected by an increase in the spread of COVID-19.

We recently reported that HHS and DOD plan to use about $1.6 billion in CARES Act funding to increase domestic production of some critical medical supplies, such as N95 respirators and filter material that is used in the respirators, which may help alleviate some of these supply chain issues.[131] We are tracking these efforts and recently reported on their status in our November 2020 report.

Addressing other SNS modernization goals. According to ASPR officials, the agency is taking additional steps to prepare the SNS to respond to future pandemics by further developing the SNS inventory and refining strategies for its management. In May 2020, ASPR solicited feedback from industry and others about the types and amounts of pandemic-related supplies to stockpile.[132] In addition, the agency requested feedback on how items could be managed by vendors to enable quicker responses to surges in demand, and ensure quality by, for example, requiring the vendor to perform preventative maintenance so that items are in working condition and deployable in a public health emergency such as COVID-19. For example, according to ASPR officials, although media reports indicated that ventilators deployed from the SNS in response to COVID-19 were inoperable, ASPR found no evidence of this and noted that the SNS has an extensive quality assurance program that ensures that ventilators are maintained in accordance with commercial process standards to prevent such an occurrence.

ASPR received 138 responses to the solicitation that included suggestions for additional items to include in the SNS to prepare for future pandemics. For example, several responses suggested ASPR include shoe and hair covers, disinfectant and sanitizing supplies, pharmaceuticals for use in sedation and treating infections, as well as other items in the SNS. ASPR officials told us that they plan to use these responses to inform the SNS’s strategy for its continuing COVID-19 response and future pandemic responses. In November 2020, ASPR officials told us they had provided a draft document to agency leadership and then to its interagency partners for review. ASPR officials also told us that they plan to finalize the strategy by the end of November 2020.

Agency Comments

We provided a draft of this report to DOD, HHS, the Department of Homeland Security, and the Office of Management and Budget for review and comment. These agencies did not provide comments on this enclosure.

GAO’s Methodology

To understand federal efforts to replenish the SNS, we reviewed information on HHS’s website and solicitation information posted by HHS on the System for Award Management website (SAM.gov). We reviewed responses to the “Nextgen SNS RFI” solicitation as well as contract and interagency agreement information provided to us by ASPR. In addition, we obtained written responses and interviewed officials from HHS and the Supply Chain Advisory Group between July and November 2020 about how they developed and implemented the 90-day supply requirements for the SNS and other past or current activities related to SNS modernization.

Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov

Related GAO Products

Defense Production Act: Opportunities Exist to Increase Transparency and Identify Future Actions to Mitigate Supply Chain Issues. GAO-21-108. Washington, D.C.: November 19, 2020.

COVID-19: Federal Efforts Accelerate Vaccine and Therapeutic Development, but More Transparency Needed on Emergency Use Authorizations. GAO-21-207. Washington, D.C.: November 17, 2020.

COVID-19 Testing Guidance

The Department of Health and Human Services and its agencies have taken several key actions to document a testing strategy and provide testing-related agency guidance, but the rationale for changes to testing guidelines has not always been transparent.

Entities involved: The Department of Defense and the Department of Health and Human Services, including its Centers for Disease Control and Prevention, Centers for Medicare & Medicaid Services, Food and Drug Administration, National Institutes of Health, and the Office of the Assistant Secretary for Health

Recommendation for Executive Action

The Secretary of Health and Human Services should ensure that the Director of the Centers for Disease Control and Prevention clearly discloses the scientific rationale for any change to testing guidelines at the time the change is made.

Key Considerations and Future GAO Work

We reported in June 2020 that while the Department of Health and Human Services (HHS) had taken steps to meet the unprecedented need for COVID-19 testing data, those data were incomplete and inconsistent. In September 2020, we reported on challenges with testing supply availability, and recommended that HHS, in coordination with the Federal Emergency Management Agency (FEMA), further develop and communicate to stakeholders plans outlining specific actions the federal government would take to help mitigate remaining medical supply gaps necessary to respond to the remainder of the pandemic—including testing supply shortages. For more information, see the States’ Perspectives on Medical Supply Availability enclosure.

Since September 2020, we have identified challenges with federal testing strategy and guidance. HHS agencies have taken several key actions to support testing, including procuring tests for long-term care settings and schools, obtaining stakeholder input, and issuing guidance. However, these agencies face challenges in developing clear guidance to facilitate consistent and appropriate use, and interpretation, of antigen tests and their results, and HHS is taking steps to address these challenges. Furthermore, while it is expected that guidance will change as new information about the novel virus evolves, frequent changes to general CDC testing guidelines were not always communicated with a scientific rationale. Until HHS ensures that CDC clearly discloses the scientific rationale for any changes to its testing guidelines at the time the changes are made, the agency risks creating confusion and eroding trust in important federal partners.

We will continue to conduct work examining HHS and its component agencies’ roles with regard to COVID-19 testing, including the development and authorization of tests, the collection and reporting of testing data, the development of testing guidance, and the availability of testing supplies.

Background

Testing people for COVID-19 and isolating those who test positive are of paramount importance to help control the virus’s spread in the community, according to the Centers for Disease Control and Prevention (CDC), the agency charged with conducting critical science and providing health information to protect the country against health threats like COVID-19. Over the duration of the pandemic, the volume and types of tests to detect the virus that causes COVID-19 have evolved, and new testing technologies have emerged that have implications for use in testing approaches.

Specifically, the Food and Drug Administration (FDA), the agency in charge of regulating medical device products marketed in the United States for use in detecting or diagnosing COVID-19 infections, has issued emergency use authorizations for two types of viral diagnostic tests: molecular and antigen tests.[133] These tests either require processing with specialized laboratory equipment, or are processed rapidly at the point of care (rapid tests), such as in a clinic, nursing home, or school setting. We previously reported that at times during the pandemic, laboratory capacity, where most molecular tests are processed, has been constrained due to shortages in supplies and equipment, as well as increased demand for tests associated with emerging hotspots in disease transmission, leading to delays in turnaround times for testing results. Because rapid antigen tests do not rely on the use of specialized laboratory equipment and provide quick results at the point of care, they may help alleviate the burden on these facilities.

As the coordinating agency for the federal response to public health and medical emergencies, HHS leads the development and implementation of the federal COVID-19 testing strategy. Under this strategy, states manage their own COVID-19 testing programs with federal support from the Office of the Assistant Secretary for Health (OASH). As of October 20, 2020, HHS had submitted two required strategic testing plans (May and August) to Congress.[134] In the latest plan, submitted in August 2020, HHS defined the federal role as setting the overall strategy and requirements, securing the supply chain, securing scarce resources, and providing technical guidance, among other things.

The COVID-19 relief laws appropriated a total of $26.5 billion to HHS to support COVID-19 testing, among other things. HHS reported total testing-related obligations of about $17.3 billion as of October 31, 2020, a majority of which was awarded to states, localities, territories, and tribal organizations, and total expenditures of $3.4 billion.[135] According to HHS officials, award recipients draw down funds in accordance with their own jurisdictional policies and practices. In addition, the length of time it will take to spend all federal appropriations allocated for testing is dependent on the progression of the COVID-19 pandemic and its impact within specific geographic locations and on specific populations. See table for HHS-reported obligations and expenditures for testing-related activities.
HHS’s Reported Obligations and Expenditures for Testing-Related COVID-19 Response Activities, as of Oct. 31, 2020

Key activity

Obligations
($ billions)

Expenditures
($ billions)

Percentage of obligated amounts expended, as of Oct. 31, 2020

Support to state, local, territorial, and tribal organizations’ preparedness

13.134

1.769

13

Testing for uninsured

0.669

0.667

100

Testing

3.545

0.981

28

Total

17.348

3.417

20
Source: GAO analysis of Department of Health and Human Services (HHS) information | GAO-21-191

Note: The percentages represent the share of obligated amounts for each key activity that were expended as of Oct. 31, 2020.

Overview of Key Issues

HHS has outlined its testing strategy and has taken several key actions to execute its plan. The August HHS Strategic Testing Plan outlines several testing priorities, including rapid hospital diagnosis, protecting vulnerable populations—especially those in long-term care facilities—and supporting the safe reopening of schools and businesses. The plan notes that targeted testing approaches—such as through diagnostic testing coupled with intermittent surveillance testing—will reduce the spread of COVID-19 when combined with public health mitigation measures. The advantage of these targeted approaches, according to the plan, is to decrease burden on laboratories, which have experienced capacity constraints at times due to supply shortages and other issues. HHS defines three types of COVID-19 testing approaches: diagnostic, screening, and surveillance. (See figure below.)

HHS Definitions and Applicable Requirements, by Type of COVID-19 Testing Approach

Notes: Most laboratories that perform testing on humans are required to meet certain federal requirements under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). Under CLIA, a laboratory is generally defined as a facility that performs testing on materials derived from the human body for the purpose of providing information on the diagnosis, prevention, or treatment of diseases in humans and may include providers, such as nursing homes and physician offices. 42 C.F.R. § 493.2 (2019).

The August HHS Strategic Testing Plan details several key actions HHS has taken to support COVID-19 testing.

Investing in tests and test supplies. Federal agencies invested in, procured, and supplied certain rapid tests, as well as test collection supplies to states, localities, territories, tribal organizations, and other federal agencies. In addition:
  • According to HHS, as of November 4, 2020, the agency reported providing almost 7.4 million Abbott BinaxNOW™ rapid antigen tests to nursing homes (see our related Nursing Homes enclosure), over 2 million to assisted living facilities, about 632,000 to home health and hospice organizations, 450,000 tests to the Indian Health Service, 389,000 tests to historically Black colleges and universities, and almost 120,000 to disaster operations in at least four states.[136] HHS and White House officials also announced plans to deliver 100 million more of these tests to states and territories, and as of November 4, 2020, had delivered roughly 42 million of those tests.[137] HHS is distributing tests to governors based on population, and has suggested states and territories use them in schools, for first responders, in the event of outbreaks, as well as for screening and surveillance in congregate settings.
  • HHS also partnered with the Rockefeller Foundation to provide rapid antigen tests to select cities and states for use in a pilot program designed to identify and share best practices in COVID-19 community screening, with a focus on K-12 schools.
  • HHS continues to invest in new testing technologies—including rapid tests and tests with new sampling technologies—through its Rapid Acceleration of Diagnostics (RADx) initiative, led by the National Institutes of Health in collaboration with the Biomedical Advanced Research and Development Authority. Through three rounds of contracts, according to NIH, the initiative is expected to increase nationwide testing capacity by 2.7 million tests before the end of 2020.
  • HHS, in collaboration with the Department of Defense, is funding six domestic production expansion projects for swabs and test kits. Combined, manufacturers are expected to increase their annual domestic production of swabs by almost 953 million and of test kits by 181 million once they reach full rate production in 2021.[138] In addition, in October 2020, HHS announced contracts with three additional companies to expand production of certain tests, including some rapid tests.

Seeking regular stakeholder feedback. HHS created the National Testing Implementation Forum, which consists of bi-weekly meetings with a rotating roster of individuals from stakeholder groups, such as laboratory and medical groups for the purpose of information sharing and feedback. The forum commenced in July, and has since covered topics such as the testing supply chain, surveillance and reopening strategies, and engaging minority and underserved communities.

Issuing federal guidance. Over the course of the pandemic, HHS agencies, including CDC, the Centers for Medicare & Medicaid Services (CMS), and FDA, have issued guidance to assist health departments, medical providers, nursing homes, schools, workplaces, and laboratories, for example, in implementing and prioritizing testing.[139]

Both the May and August Strategic Testing Plans detail the implementation of the White House Testing Blueprint—the formal national strategy, according to HHS.[140] Although the May Strategic Testing Plan was made public, HHS has not made the August plan available to the public.[141]

Proper use and interpretation of rapid antigen tests poses guidance-related challenges. In keeping with its federal testing strategy, HHS took action to alleviate laboratory constraints by quickly procuring rapid antigen tests and distributing them to certain settings, such as nursing homes and states. However, the interpretation of rapid antigen test results can be complex and provides a challenge for agencies in setting clear guidance on their use and interpretation:
  • Lack of user familiarity. As we describe in our Nursing Homes enclosure, nursing homes had previously relied on lab-based, molecular testing. In addition, in suggesting that states use rapid antigen tests to support the opening of K-12 schools, HHS is providing schools with a tool they had likely not used before.
  • Higher likelihood of false negative results. Rapid antigen tests carry a higher chance of producing false negatives than do molecular tests, according to the FDA. Negative test results are generally considered “presumptive” and may need to be confirmed with molecular testing in certain situations, such as when a negative result is unexpected given clinical symptoms.[142]
  • Potential for false positive results. CDC guidance notes that false positives are rare, but also notes that clinicians should understand antigen test performance characteristics in order to recognize potentially false positive results, which can occur with any diagnostic test given that no test is 100 percent accurate. False positive results may make up a greater proportion of total positive results in populations where prevalence is low. Some states and nursing homes have expressed concerns with the frequency with which false positive test results have occurred given the implications for that setting.[143]
  • FDA-indicated use. As of November 4, 2020, FDA has authorized antigen tests for use in individuals suspected of having COVID-19 within a specific number of days since the onset of symptoms—as opposed to use in screening asymptomatic individuals. CLIA-certified laboratories, which can include nursing homes and other settings, are required by CMS regulations to follow the manufacturer’s instructions for use when performing laboratory testing.[144] However, HHS has announced that CMS will temporarily exercise enforcement discretion for the duration of the COVID-19 public health emergency for use of antigen tests on asymptomatic individuals. In particular, such testing might occur outside of the authorized indication, such as for routine screening in nursing homes and other settings, HHS has acknowledged.[145] In late October, FDA updated its guidance to encourage rapid antigen test developers to conduct clinical validation studies to support their use in asymptomatic individuals, as applicable.[146]
  • Inconsistent data reporting requirements. While HHS requires that all COVID-19 test results be federally reported, including those for rapid antigen tests, some states do not require reporting of antigen test results.[147] In October, 2020, CDC supplemented previous HHS reporting guidance on its website, providing additional detail for the reporting of antigen among other tests, and introduced an option for long term care facilities to report point-of-care test results through the National Healthcare Safety Network.[148]

Given HHS’s Strategic Testing Plan priority of protecting vulnerable populations, including those in nursing homes, and HHS recommendations for use of rapid antigen tests in other settings such as schools, clear guidance on the use and interpretation of antigen tests is important so that they are used properly and consistently. Several stakeholder groups and two experts we interviewed told us that some nursing homes and other providers have been confused about how to use the new antigen tests, especially with regard to interpreting and reporting the results; for example, some noted that nursing homes may not understand when to seek a confirmatory test.

HHS officials acknowledged the challenges in providing guidance on rapid antigen tests and have taken action to clarify guidance. For example,
  • On October 30, 2020, CMS announced the launch of the Nursing Home Resource Center, which will serve as a centralized hub bringing together the latest information, guidance, and data on nursing homes for facilities, frontline providers, residents and their families, including information on COVID-19 testing.[149]
  • Previously, in August, 2020, CDC provided guidance specific to the use of antigen tests in nursing homes, including a one-page algorithm for the interpretation of antigen test results in nursing homes.
  • CDC and FDA issued guidance and updated FAQ in October and November, 2020, including the subject of false positive test results, and CDC updated its testing guidance for schools.[150]

We noted that, as of October 23, 2020, CMS had numerous relevant guidance documents and, although many linked to other relevant CDC guidance, they do not link directly to the CDC algorithm. Linking to the algorithm is important because it provides clear and concise recommendations to nursing homes on how to interpret antigen test results under various circumstances. CDC officials told us they plan to coordinate with CMS to ensure that the algorithm is included in the future. We will continue to conduct work examining federal guidance related to testing, including those related to rapid antigen testing.

Changes to CDC testing guidelines have not always been communicated in a transparent manner. While it is to be expected that federal guidelines may change as we learn more about the novel virus and its underlying science, CDC testing guidelines have been changed several times over the course of the pandemic, with little scientific explanation of the rationale behind the changes.

Our interviews with provider and stakeholder groups found that frequent changes in guidelines, without transparent rationale, create confusion and erode trust in important federal partners, and interview groups were particularly struck by the lack of rationale provided for an August change made to CDC testing guidelines. In September 2020, we reported that CDC changed its guidelines in late August to de-emphasize the importance of testing asymptomatic individuals who had been exposed to COVID-19, without an explanation for these changes. According to provider and public health stakeholder groups, this change sparked confusion and disagreement from the public health community and others. Further, a number of these groups criticized this change as inconsistent with science.[151] Specifically, they noted that this change would limit the ability of public health officials to test, contact trace, and isolate infected individuals, which is important to controlling the spread of the virus, according to CDC.

Almost four weeks after the August change, CDC updated its testing guidelines again to state that asymptomatic individuals with known exposure should be tested. See figure below as an example of selected changes over 4 months to CDC website guidelines for testing of asymptomatic individuals with little information publicly provided to explain the rationale for these changes.

Timeline of Selected Changes to Centers for Disease Control and Prevention (CDC) Testing Guidelines for Asymptomatic Individuals with Known or Suspected Exposure

CDC and HHS officials told us the August changes were made to emphasize testing of symptomatic and high-risk individuals and to focus on taking appropriate public health measures as a result of testing, but officials did not explain why no scientific rationale was provided at the time. CDC officials also told us that the August changes were misinterpreted by many as implying that those without symptoms who were close contacts of confirmed cases should not be tested, prompting the September update.

CDC officials told us they regularly consult with state, city, and local partners regarding guidelines on recommended practices and considerations, and officials from public health organizations we interviewed told us that they are often given an early advisory on such changes to guidelines, and are sometimes invited to provide feedback on forthcoming CDC guidelines. However, according to these organizations, no such advisory was given on the August change and, as a result, they were unable to prepare their members for the change. CDC officials confirmed that stakeholders were not provided with an advisory for the August change and told us that the update was coordinated by HHS and the White House Coronavirus Task Force.

According to stakeholder groups, the lack of transparency regarding these changes, coupled with the inconsistent messaging on several changes in a short time frame, led to confusion and could ultimately hinder consistent application of testing approaches to best control spread of the virus. This lack of transparency in CDC guideline updates is inconsistent with CDC’s Crisis and Emergency Risk Communication Manual, which states that “by fully and clearly explaining your messages and their reasoning, your audiences will be less likely to doubt you.”[152]

CDC officials told us that the change to testing guidelines in August did not follow the routine agency process, which normally involves stakeholder advisory and consultation. Furthermore, according to CDC officials, HHS and the White House Coronavirus Task Force coordinated the change rather than CDC. Until HHS ensures that CDC clearly discloses the scientific rationale for any changes to its testing guidelines at the time the changes are made, the agency risks creating confusion and eroding trust in important federal partners.

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS concurred with our recommendation and provided general comments, which are reproduced in Appendix IV. HHS noted that CDC officials typically consult with scientific stakeholders when issuing guidance and said HHS will continue to evaluate its processes in this area. HHS also provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed agency guidance and other documentation, and interviewed HHS agency officials to obtain information on steps taken to implement, communicate, and update federal strategy and other guidance on COVID-19 testing. We also conducted interviews with public health experts and stakeholder groups, including provider groups, to obtain their perspectives on agency guidance and communication with regard to testing. To select interviewees, we identified a variety of groups that were impacted by federal testing strategy and guidance and that had broad geographic representation, in addition to researchers and practitioners with work in public health. In doing so, we identified 17 stakeholder groups; we spoke with 16 of these groups and obtained written comments from one of them. These groups represent, across the country
  • over 100,000 state and local public health officials and epidemiologists, as well as public health laboratories;
  • national, regional, community, and health system clinical laboratories;
  • state governors’ offices and staff, as well state education officials and school administrators; and
  • a variety of providers, including nursing home practitioners, physicians, and nurses.

We also identified and interviewed five public health experts who had extensive experience in medical science and public policy, including one expert with experience in nursing home infection control. We identified these experts based on our ongoing related work.

Contact information: Mary Denigan-Macauley, (202) 512-7114, deniganmacauleym@gao.gov

Medicaid Spending

The potential exists for two Department of Health and Human Services agencies to issue duplicative or erroneous payments to providers. The department has taken steps to assure payments are correct, but the effectiveness of agency efforts are unknown.

Entities involved: Centers for Medicare & Medicaid Services and the Health Resources and Services Administration, within the Department of Health and Human Services.

Key Considerations and Future GAO Work

In our September 2020 report, we found the potential for duplicate or erroneous payments for COVID-19 testing of uninsured individuals by the Health Resources and Services Administration (HRSA) and the Centers for Medicare & Medicaid Services (CMS), both within the Department of Health and Human Services (HHS). While HRSA and CMS have implemented controls, the potential for these duplicate payments continue to exist. We will continue to monitor these issues going forward.

Background

Medicaid is one of the nation’s largest sources of funding for health care services for low-income and medically needy individuals, covering an estimated 77 million people and spending approximately $673 billion in fiscal year 2020.[153] States and territories administer their Medicaid programs within broad federal rules and according to state plans approved by CMS, which oversees Medicaid at the federal level. The federal government matches states’ spending for Medicaid services according to a statutory formula known as the Federal Medical Assistance Percentage (FMAP).[154]

The Families First Coronavirus Response Act (FFCRA) provides a temporary increase in the FMAP for all qualifying states and territories.[155] FFCRA also created an option for states to provide Medicaid coverage of COVID-19 diagnostic testing and related services to uninsured individuals.[156] The FFCRA and the Paycheck Protection Program and Health Care Enhancement Act each appropriated $1 billion to reimburse providers for conducting COVID-19 testing of uninsured individuals.[157] HRSA is responsible for administering these funds and paying providers that submit claims for COVID-19 testing.

Overview of Key Issues

Potential duplicate or erroneous payments for COVID-19 testing. HRSA administers a $2 billion program to pay for COVID-19 testing of uninsured individuals. In addition, CMS has approved 15 states and three territories to make Medicaid payments to providers for COVID-19 testing of uninsured individuals, with the federal government responsible for 100 percent of the cost.[158] The Congressional Budget Office estimates that the Medicaid payments for testing of uninsured individuals will total approximately $2 billion in 2020 and 2021.

As of October 28, 2020, HRSA has paid $655 million for COVID-19 testing of uninsured individuals, with a total of $218 million in payments made to providers in the 15 states and two of three territories approved to use 100 percent federal Medicaid funds to pay for testing of uninsured individuals. While state reporting of Medicaid payments for COVID-19 testing is incomplete—an estimated $336,000 in Medicaid payments for COVID-19 testing for uninsured individuals have been reported as of October 31, 2020—CMS officials expect payments to increase in the future.

HRSA is responsible for assuring the payments for COVID-19 testing for uninsured individuals are not made for individuals who have health insurance coverage, including individuals residing in states and territories that cover COVID-19 testing for the uninsured through their Medicaid programs. According to HRSA officials, the program administrator implemented both prospective and retrospective payment controls over the last several months for COVID-19 testing payments for uninsured individuals.

HRSA officials stated these payment controls are dependent on national clearinghouses that compile insurance coverage information from health insurance carriers having Medicaid coverage information. Health care providers and payers may use clearinghouses to check for health insurance coverage for purposes of billing the appropriate payer.

According to CMS and HRSA officials, state Medicaid agencies transmit files with Medicaid coverage and payment information to the national clearinghouses. As such, these prospective checks identify individuals with Medicaid coverage, including coverage of COVID-19 testing for the uninsured, and HRSA will not pay providers that submit claims to HRSA for testing these individuals, according to HRSA officials. A retrospective payment control also checks the national clearinghouses monthly to identify claims for COVID-19 testing for the uninsured for situations in which Medicaid coverage information is now available but was not available at the time the claims were submitted and paid.

The effectiveness of these controls hinges on states reporting coverage and payment information to the clearinghouses. Preliminary data from the states and territories covering COVID-19 testing for uninsured individuals through Medicaid indicate that such reporting is uncertain. Of the 15 states and three territories with approval to cover testing for uninsured individuals through Medicaid, 10 told us that they do not submit files with Medicaid enrollment and payment information for uninsured individuals with COVID-19 testing coverage to the national clearinghouses. Officials from four of these states said they respond to requests from providers or other payers about Medicaid coverage of specific individuals, but do not transmit these data to national clearinghouses. Officials from five other states told us that they do submit Medicaid enrollment and payment information for uninsured individuals with COVID-19 testing coverage to national clearinghouses.

Because HRSA’s payment controls rely on information submitted to those national clearinghouses, we continue to have concerns about the potential for duplicate or erroneous payments and plan to monitor the results of these prospective and retrospective payment controls to assess their effectiveness. As discussed below, however, states have reported limited Medicaid spending for COVID-19 testing for uninsured individuals, as of October 31, 2020.

Medicaid spending. As of October 31, 2020, COVID-19-related federal Medicaid expenditures totaled approximately $23 billion, or 7 percent of total federal spending, on Medicaid services for this time period.[159] The majority of the COVID-19-related spending is for the 6.2 percent FMAP increase, with about $336,000 for testing payments by the 15 states and three territories approved to cover COVID-19 diagnostic testing and related services to uninsured individuals under their Medicaid plans with a 100 percent federal match.

Based on information we obtained from the 14 states and one of the three territories approved to cover testing for uninsured individuals through Medicaid, the implementation of the coverage has been slow. For example,
  • One state that has implemented coverage of COVID-19 testing for the uninsured stated that they have received and paid few claims.
  • One state that has reported few COVID-19 testing expenditures noted that having two different payment programs for COVID-19 testing for the uninsured adds a level of complexity to administering the Medicaid coverage and for providers to bill correctly.

The table below summarizes federal Medicaid spending related to the 6.2 percent FMAP increase, COVID-19 expenditures in Medicaid programs approved to cover testing for uninsured individuals, and total Medicaid spending for services as of October 31, 2020.
Federal Medicaid COVID-19 and Total Expenditures, by State and Territory, as of October 31, 2020

State or territory

COVID-19-related federal Medicaid expenditures from the 6.2-percentage-point-increased FMAP
Dollars in millions

COVID-19 related federal expenditures for uninsured testing
Dollars in millions

Total federal Medicaid services expenditures in 2020
Dollars in millions

Alabama

278

NA

3,546

Alaskaa

49

NA

1,127

Arizona

458

NA

8,994

Arkansas

229

NA

4,101

Californiaa

2,764

< 1 million

50,674

Colorado

360

< 1 million

4,464

Connecticutb

202

< 1 million

2,819

Delawarea

92

NA

1,268

District of Columbiab

81

NA

1,204

Florida

1,254

NA

13,436

Georgia

520

NA

6,275

Hawaii

81

NA

1,235

Idaho

102

NA

1,549

Illinois

835

0

11,258

Indiana

555

NA

8,567

Iowaa

212

0

3,006

Kansasa

183

NA

1,925

Kentucky

377

NA

7,564

Louisiana

414

0

7,412

Maine

134

< 1 million

1,758

Maryland

416

NA

5,762

Massachusettsa

554

NA

6,420

Michigan

710

NA

10,853

Minnesotab

378

< 1 million

3,451

Mississippi

260

NA

3,509

Missouri

494

NA

6,016

Montana

52

NA

1,280

Nebraska

107

NA

1,091

Nevada

131

0

2,353

New Hampshire

89

0

1,119

New Jersey

591

NA

7,716

New Mexico

206

< 1 million

4,083

New York

2,754

NA

35,093

North Carolinaa

489

0

6,023

North Dakota

48

NA

625

Ohioa

610

NA

8,935

Oklahomaa

227

NA

2,855

Oregona

344

NA

6,297

Pennsylvaniab

925

NA

11,405

Rhode Island

101

NA

1,394

South Carolina

310

NA

3,882

South Dakota

41

NA

486

Tennessee

515

NA

5,957

Texas

2,009

NA

22,599

Utah

115

< 1 million

1,858

Vermont

64

NA

797

Virginia

313

NA

4,414

Washingtonb

267

NA

4,254

West Virginiab

104

0

1,774

Wisconsina

431

NA

3,795

Wyoming

26

NA

273

States totalc

22,858

<1 million

318,552

American Samoa

2

NA

31

Guam

4

NA

95

Northern Mariana Islands

2

0

32

Puerto Rico

74

0

1,822

Virgin Islandsb

1

0

31

Territories totalc

83

0

2,011
Legend
FMAP = federal medical assistance percentage
NA = Not applicable. States that did not provide COVID-19 testing for uninsured individuals as of October 31, 2020.
Source: GAO analysis of data from the Centers for Medicare & Medicaid Services. | GAO-21-191.

Note: Federal Medicaid payments were available for the second, third and fourth quarters of fiscal year 2020—January 1, 2020, through October 31, 2020—and do not include expenses for program administration.
aEleven states that reported expenditures for the fourth quarter, reported uncertified expenditures. All the states and territories reported certified expenditures for the second and third quarters. Certified state expenditures have been reviewed by states and are certified as being Medicaid allowable expenditures. Both certified and uncertified state expenditures are preliminary, as they are subject to further review and are likely to be updated as states continue to report their expenditures and receive federal matching funds. States can report payments and adjustments to payments up to 2 years after a quarter ends.
bSix states and the 1 territory did not report any fourth quarter expenditures as of October 31, 2020.
cTotals may not sum exactly due to rounding.

Agency Comments

We provided a draft of this enclosure to HHS and the Office of Management and Budget (OMB) for review and comment. HHS provided technical comments, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed federal laws, CMS data from its Medicaid expenditure reporting system, HRSA’s publically available data on payments for COVID-19 testing for uninsured individuals, and Congressional Budget Office spending estimates. We also reviewed CMS Medicaid guidance, including requirements for administering the optional COVID-19 testing for the uninsured; and HRSA guidance and requirements for providers to submit claims for COVID-19 testing for uninsured individuals; and our prior work related to Medicaid. We reviewed CMS guidance to states on reporting COVID-19 expenditures through the Medicaid expenditure reporting system and conducted data reliability checks on state reported-expenditure data. We reviewed HRSA documentation and written responses from agency officials regarding HRSA’s payment data. We determined that the CMS and HRSA data were sufficiently reliable for the purpose of this enclosure. We discussed HRSA’s efforts to prevent duplicate or erroneous payments with HRSA officials. We also received information from Medicaid officials in 14 states and 1 territory that have implemented Medicaid coverage for COVID-19 testing for the uninsured to understand how states are implementing this coverage and the extent they share Medicaid coverage and payment information with national insurance clearinghouses. Their views are not generalizable across all states.

Contact information: Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov

Medicare Telehealth Waivers

Telehealth can provide important access for beneficiaries and enable providers to continue delivering services; however, Medicare also needs to be attentive to the risks associated with waivers of telehealth payment requirements. The Centers for Medicare & Medicaid Services needs strong oversight of Medicare telehealth services to prevent fraud, waste, and abuse in light of waivers of key requirements that widely expanded availability of these services.

Entities involved: Centers for Medicare & Medicaid Services, within the Department of Health and Human Services

Key Considerations and Future GAO Work

We reported in June 2020 that careful monitoring is required to prevent potential fraud, waste, abuse, and improper payments that can arise from waiving longstanding requirements and safeguards in the Medicare program in response to the COVID-19 pandemic.[160] Officials at the Centers for Medicare & Medicaid Services (CMS) told us that the agency is using existing program integrity practices and has also implemented new program safeguards to prevent improper payments and reduce fraud, waste, and abuse related to telehealth waivers. As we have noted previously when reporting on Medicare program integrity, having safeguards is critical for effective program management.

Given stakeholder interest in making some telehealth waivers permanent, CMS needs strong oversight to mitigate these risks as well as guard against potential overutilization of telehealth because of its convenience. For example, increased utilization of telehealth services may result in increased Medicare spending, especially if those services are used to supplement, not just substitute for, in-person visits both during and after the pandemic. We plan to conduct additional work on the effect of telehealth waivers on utilization, access, and quality of care, as well as CMS’s continued oversight of these services.

Background

Telehealth services include certain clinical services that are typically furnished in person but are instead provided remotely via telecommunications technologies. By law, Medicare fee-for-service generally only pays for these services under limited circumstances; such as when the patient is located in certain health care settings and certain, mostly rural, geographic locations and the service is performed by certain provider types.[161]

In response to COVID-19, the Secretary of Health and Human Services declared a public health emergency on January 31, 2020, and the President declared a national emergency on March 13, 2020. These two actions triggered the availability of authority under section 1135 of the Social Security Act to temporarily waive or modify certain requirements of the Medicare program. In addition, Congress passed and the President signed three laws that progressively expanded or clarified the Secretary’s authority to temporarily waive or modify existing Medicare telehealth requirements.[162] Using these authorities, the Secretary waived or modified certain telehealth provisions to increase access to services and give providers more flexibility in treating beneficiaries.[163] Among other things, the changes
  • allow telehealth services to be provided nationwide, rather than in mostly rural locations;
  • allow beneficiaries to receive, and providers to furnish, telehealth services from any setting, including beneficiaries’ and providers’ homes;
  • temporarily add more than 135 telehealth services to the list of covered telehealth services, including 11 services that were recently added through an expedited process for approval of new services instead of the normal rulemaking process which required notice and opportunity to comment to stakeholders;
  • allow certain services to be furnished using audio-only technology such as telephones, instead of requiring the use of audio and video systems; and expand eligible provider types to include physical therapists, occupational therapists, and speech language pathologists, among others.

To ensure an adequate supply of providers to respond to the pandemic, CMS also waived other program requirements that affect the way providers deliver services, including telehealth services. For example, CMS temporarily removed, when certain conditions are met, Medicare’s requirement that out-of-state practitioners be licensed in the state where they are providing services. CMS also waived certain provider screening requirements, including criminal background checks for newly enrolling home health agencies and opioid treatment programs.

Overview of Key Issues

Increased telehealth utilization. With the new telehealth waivers, utilization of these services sharply increased, according to the Department of Health and Human Services’ (HHS) Office of the Assistant Secretary for Planning and Evaluation (ASPE). For example, weekly telehealth primary care visits increased sharply from about 6,700 in mid-March 2020 (just before the telehealth waivers were issued) to peak at almost 1.3 million in mid-April 2020, while in-person visits precipitously dropped during this time. The spike in telehealth services began leveling off as in-person visits resumed in late April 2020.[164]

Potential for increased overall Medicare utilization and spending. There is broad interest among providers and policymakers in permanently adopting some of these telehealth waivers; however, some experts have cautioned that the convenience of telehealth can increase utilization of services and, therefore, spending. For example, Medicare providers may begin billing for follow-up telephone visits (which they could not bill before) after an in-person visit, or beneficiaries may seek, and providers may bill for, treatment of less serious conditions such as the common cold.

Some studies have shown that telehealth can be additive; for example, a 2017 study of Medicare beneficiaries’ use of telehealth services for mental health concluded that these services added to, rather than substituted for, in-person services.[165] ASPE’s analysis also shows stable use of telehealth services at a higher level than prior to the pandemic after in-person services started to resume. This suggests that the increased demand for telehealth may continue even after the pandemic. Since Medicare pays equivalent rates for telehealth as for in-person services, continued utilization of telehealth services can increase total Medicare spending if it results in an overall increase in services—both in-person and telehealth combined.

Potential for improper payments and fraud, waste, and abuse. Expansion of telehealth waivers and the subsequent growth in telehealth utilization have prompted concern among policymakers and researchers about the potential for improper payments, and fraud, waste, and abuse in the Medicare program. Fraud schemes involving telehealth have been previously reported. For example, according to a report issued by the HHS Office of Inspector General and the Department of Justice, in fiscal year 2019, the federal government filed charges relating to a telemedicine and durable medical equipment scheme and a genetic testing scheme involving fraudulent telemedicine companies that together resulted in losses of over $3 billion.[166]

CMS oversight activities during the pandemic. According to agency officials, CMS continues to utilize existing program integrity tools during the pandemic to prevent improper payments and reduce fraud, waste, and abuse associated with telehealth services. For example, CMS is
  • using its Fraud Prevention System to identify inappropriate Medicare claims prior to payment and to flag providers with suspicious billing patterns through post-payment screens; and
  • analyzing claims data and engaging in increased collaboration with federal law enforcement agencies to identify and address COVID-19 related fraud schemes.

In addition, according to CMS officials, after temporarily suspending pre- and post-payment medical reviews, CMS has resumed post-payment reviews for claims filed prior to March 1, 2020, and has initiated post-payment review for claims filed thereafter for specific investigative projects. CMS has also resumed normal provider investigation activities that require written communications after temporarily limiting them. CMS is allowing reviews that require in person interactions only with prior CMS approval and consistent with any state and local requirements.

CMS officials further stated that in response to the pandemic the agency has implemented new program integrity activities to mitigate the risks of fraud, waste, and abuse related to telehealth waivers, including:
  • closely monitoring billing behaviors in areas particularly prone to fraud;
  • conducting stakeholder calls and issuing guidance designed to educate providers on the additional telehealth flexibilities, including how to appropriately bill for telehealth services;
  • informing beneficiaries about Medicare coverage of telehealth services through updates to Medicare.gov and the 2021 “Medicare & You” handbook, and using newspapers, email, and social media to educate beneficiaries about available telehealth services.

CMS has stated that it is actively monitoring telehealth services, but that it is too early to fully assess the effectiveness of these efforts. We will continue working with CMS to further evaluate the agency’s program integrity efforts related to telehealth waivers, including review of relevant policies, documentation of the agency’s existing and new program integrity safeguards, and examples of potential improper billing or fraudulent activities uncovered through these efforts.

Agency Comments

We provided a draft of this enclosure to HHS and the Office of Management and Budget (OMB) for review and comment. HHS provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not have comments on this enclosure.

GAO’s Methodology

We reviewed applicable federal laws and regulations, agency guidance and other materials, and we obtained written answers to questions from CMS officials.

Contact information: Jessica Farb, (202) 512-7114, farbj@gao.gov

Indian Health Service

Indian Health Service has obligated $713 million of the $1 billion in supplemental funds directly appropriated to the agency, as of September 30, 2020, to prevent, prepare, and respond to the COVID-19 pandemic.

Entity involved: Indian Health Service, within the Department of Health and Human Services

Key Considerations and Future GAO Work

We plan to monitor Indian Health Service’s (IHS) use of funds provided under COVID-19 relief laws going forward and the agency’s response and recovery efforts to address the pandemic, including the use of telehealth and coordination with other federal agencies. Separately, we also plan to examine disparities in health outcomes related to COVID-19 among different populations, including the American Indian and Alaska Native (AI/AN) population, and the behavioral health impacts of COVID-19.

Background

IHS, an agency within the Department of Health and Human Services (HHS), is charged with providing health care services to more than 2 million AI/AN people who are members or descendants of federally recognized tribes.[167] IHS provides health care services either directly through a system of facilities, such as hospitals, health clinics, and health stations that it operates; or indirectly through facilities operated by tribes or others.[168] In addition, IHS awards contracts and grants to urban Indian organizations that provide health care to AI/AN people residing in urban centers.

As of October 17, 2020, IHS had reported 61,191 confirmed cases of COVID-19, with some tribes experiencing more cases per capita than most U.S. states.[169] The COVID-19 relief acts appropriated more than $1 billion in supplemental funding to IHS for its COVID-19 efforts. This includes $64 million appropriated by the Families First Coronavirus Response Act and about $1 billion appropriated by the CARES Act.[170] In addition to funds specifically appropriated for IHS, HHS also allocated other COVID-19 relief funding to IHS.[171] We previously reported in June 2020 on IHS’s allocation of its supplemental COVID-19 relief funding by program area and activity.

As of September 30, 2020, IHS had obligated most of its supplemental funding to support IHS-identified priorities related to COVID-19, including prevention, detection, treatment, and recovery. (See table below.)
Allocation and Obligation of Supplemental Funding Provided to the Indian Health Service (IHS) to Address COVID-19

Purpose

Amount allocated
(dollars in millions)

Amount obligated as of 9/30/20
(dollars in millions)
CARES Acta

IHS federal health programs and Tribal Health Programs (THP). Funding allocated using existing distribution methodologies for program increases in hospitals and health clinics, purchased and referred care, alcohol and substance abuse, mental health, community health representatives, and public health nursing funding.

$465

$395

Purchased and referred care (PRC). Care for medical or dental services provided outside of IHS or tribal health care facilities, allocated using the PRC distribution formula for new PRC funds.

155

117

Telehealth expansion. To support activities across the IHS, tribal, and urban Indian organization (UIO) health programs.

95

0

Medical equipment. Included within $125 million transfer limit to IHS facilities account.

74

56

Electronic health record stabilization and support.

65

0.2

Urban Indian Organizations. Funding provided through existing contracts under the Indian Health Care Improvement Act as a one-time amount for each UIO plus an additional amount based on each UIO’s urban Indian users.

50

50

Maintenance and improvements. Included within $125 million transfer limit to IHS facilities account.

41

32

Unanticipated needs.

30

0

Epidemiology, surveillance, and coordination. Funding for Tribal Epidemiology Centers and national surveillance coordination at IHS headquarters.

26

12

Sanitation and potable water. Included within $125 million transfer limit to IHS facilities account.

10

9

Non-clinical federal staff support. Activities include deep cleaning of office space, equipment for teleworkers, protection for non-clinical staff, and non-clinical staff overtime.

10

0

Public health support activities. Includes partnerships with key stakeholders to broaden messaging about COVID-19 prevention, response, and recovery in Indian Country.

6

0

Test kits and materials. Supports acquisition and distribution to IHS, THPs, and UIOs.

5

1
Families First Coronavirus Response Act

COVID-19 testing. For diagnostic tests and related office visits.

64

53
Source: GAO review of IHS information. | GAO-21-191

aThe CARES Act included three provisions guiding IHS’s allocations: (1) A minimum of $450 million for distribution to IHS directly operated programs, tribal health programs, and Urban Indian Organizations; (2) a maximum of $65 million for electronic health record stabilization and support; and (3) any remaining funds to be allocated at the discretion of the IHS Director for COVID-19 response activities, with a maximum of $125 million allowed to be transferred to the IHS facilities account.

Overview of Key Issues

Allocation of funds. In responding to the pandemic, IHS has quickly obligated and expended supplemental funding to health care providers and to address facility, sanitation, and equipment needs; however, certain funds for testing and related activities—appropriated to HHS, but administered by IHS—have taken longer to obligate and expend.

Direct funding distributions. The CARES Act established a minimum amount of $450 million to be distributed directly to IHS operated health programs, tribally operated health programs, and urban Indian organizations. IHS allocated $515 million for this purpose, most of which had been obligated as of September 30, 2020. IHS officials said that the agency’s ability to modify tribal organizations’ contracts under the Indian Self-Determination and Education Assistance Act allowed it to quickly disburse the funds. Overall, $713 million of the $1.096 billion directly appropriated to IHS had been obligated as of September 30, 2020, 90 percent of which has been expended.

Additional costs and improvements. IHS has estimated that billions of dollars are needed to address a backlog of costs related to facility maintenance and improvements, sanitation and potable water projects, and medical equipment needs—all of which make responding to COVID-19 more difficult. In addition to providing funds for health services and operations, the CARES Act authorized IHS to transfer up to $125 million of the supplemental appropriation for its Indian Health Services appropriation account to its Indian Health Facilities account. IHS allocated the maximum amount for these purposes.

IHS’s role in testing and related activities. In addition to CARES Act and Families First Coronavirus Response Act funding appropriated to IHS for its COVID-19 response, the agency has a role in disbursing $750 million appropriated to HHS under the Paycheck Protection Program and Health Care Enhancement Act for COVID-19 testing and testing-related activities.[172] According to IHS officials, HHS used an Intra-Departmental Delegation of Authority to authorize IHS to provide the funds to IHS and tribal health programs, but the funds retained their identity as HHS appropriated amounts. According to IHS, disbursing the funds in this manner required the agency to execute agreements with each tribe or tribal organization. IHS officials noted that the execution of these bilateral amendments creates a capacity concern for IHS and some tribes, especially smaller tribes and those in hotspots that need to focus on immediate and urgent COVID-19 response activities within their communities.

Telehealth expansion. In June 2020, we reported that IHS allocated $95 million to expand access to telehealth services. IHS officials reported experiencing nearly a twenty-fold increase in telehealth visits through the agency’s primary telehealth platform. Since the April telehealth expansion, usage has increased from about 75 visits per week, on average, to a peak of 1,400 per week, with average use as of October at about 450 visits per week.[173] We previously reported on the challenges IHS experienced with the increased use of telehealth services pushing or exceeding the limits of broadband availability in remote and rural areas.

IHS reported that the agency reviewed access to acute care facilities and has identified several facilities with moderate telehealth bandwidth. Officials told us that all IHS facilities have connectivity to support some level of telehealth services; however, the majority of rural patients lack adequate access to service in their homes. IHS noted that the Federal Communications Commission (FCC) has provided access opportunities through the COVID-19 Telehealth Program.[174] IHS also continues to support tribal applications and reimbursement through the Rural Health Care program within FCC’s Universal Services Fund.[175]

Federal partnerships. During the pandemic, IHS officials have leveraged federal partnerships with the Department of Veterans Affairs (VA), Veterans Health Administration, and Federal Emergency Management Agency (FEMA). Based on the Secretary of Health and Human Services’s public health emergency declaration, IHS officials reported that VA expanded access to hospital care and medical services in its VA network to non-veteran beneficiaries. For example, agency officials noted that VA provided care to non-veteran patients of a IHS facility that was not able to provide decompression for patients on ventilators. Doing so freed up the IHS facility to treat other critical patients.

Additionally, IHS reported that the agency has worked with FEMA under the President’s emergency declaration. IHS further noted that the agency is working to pursue a formal partnership with the Strategic National Stockpile to receive supplies, medicines, and devices for life-saving care on a short-term basis and tribal governments now have the option to request public assistance from FEMA.

Agency Comments

We provided a draft of this enclosure to HHS and the Office of Management and Budget (OMB) for review and comment. HHS provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not have comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed federal laws and agency documents, and received written responses to our questions from agency officials.

Contact information: Jessica Farb, (202) 512-7114, farbj@gao.gov

Veterans Health Care

The Department of Veterans Affairs does not have a plan to conduct routine inspections on the quality of care in all state veterans homes, which provide nursing home care, during the COVID-19 pandemic, nor is it collecting timely data on COVID-19 cases and deaths in these nursing home facilities.

Entity involved: Veterans Health Administration, within the Department of Veterans Affairs

Recommendations for Executive Action

The Department of Veterans Affairs Under Secretary for Health should develop a plan to ensure inspections of state veterans homes occur during the COVID-19 pandemic, which may include using in-person, a mix of virtual and in-person, or fully virtual inspections.

The Department of Veterans Affairs Under Secretary for Health should collect timely data on COVID-19 cases and deaths in each state veterans home, which may include using data already collected by the Centers for Medicare & Medicaid Services.

Key Considerations and Future GAO Work

We previously reported shortcomings in the Department of Veterans Affairs’ (VA) inspections of nursing home facilities, including state veterans homes (SVH), and highlighted these concerns in our June 2020 report. Nursing home residents, who often are in frail health and living in close proximity, are at a high risk of being infected with—and dying from—COVID-19, according to the Centers for Disease Control and Prevention (CDC). (See our enclosure on Nursing Homes.)

Because of these known risks, the health and safety of the more than 20,000 residents in 158 SVHs VA reports has been a particular concern. For example, according to CDC data, the greatest risk for severe illness from COVID-19 is among those aged 85 or older and almost half of veterans in SVHs are in this age group.

In July 2019, we reported that VA does not require its inspection contractor to identify all failures to meet VA’s quality standards as deficiencies. Instead, SVHs can address issues while the contractor is onsite to avoid being cited for a deficiency on the inspection report. Because VA does not have complete information on deficiencies identified at SVHs, and therefore cannot track this information to help identify trends in quality across these homes, we recommended that VA should require all failures to meet standards to be cited as deficiencies.

VA concurred with this recommendation. In August 2020, VA modified its contract to require its inspection contractor to begin citing all failures to meet standards as deficiencies, according to VA officials. As of October 2020, VA reported it is in the process of revising its policy to reflect this requirement.

We also recommended that VA provide information on the quality of all SVHs that is comparable to the information provided on the other nursing home settings on its website. Although the Centers for Medicare & Medicaid Services (CMS) inspects approximately two-thirds of SVHs (those receiving funding from CMS), VA is the only federal entity that conducts regular inspections on the quality of care in all SVHs.[176] Therefore, VA possesses information that is not available elsewhere. VA concurred in principle and as of October 2020, reported it is exploring options for how to implement our recommendation.

In the coming years, VA projects an increase in the number of veterans receiving nursing home care. This makes it particularly important that VA ensure veterans receive quality care. We have ongoing work reviewing VA’s response to the pandemic in community living centers (CLC)—VA -owned and-operated nursing homes. We also plan to examine infection prevention at SVHs, and the quality of care at CLCs.

Background

VA administers one of the largest health care systems in the U.S. and provides health care to more than 9 million veterans—including more than 39,000 veterans in a variety of nursing home settings. For example, VA partners with state governments, who own and operate SVHs. According to VA, in fiscal year 2019, VA paid SVHs $1.17 billion for an average daily census of 20,072 veterans and projects it will pay $1.7 billion to SVHs in fiscal year 2022.[177] Although VA does not exercise any supervision or control over the administration, personnel, maintenance, or operation of any SVH, it conducts annual inspections.[178] In addition, VA policy prevents it from making payments to SVHs until it determines that they meet applicable quality standards.[179]

The CARES Act contains several provisions to assist SVHs in their response to COVID-19.[180] Specifically, it waives requirements that SVHs maintain a 90 percent overall occupancy rate and 75 percent veteran occupancy rate, to ensure SVHs continue to receive per diem payments from VA at a time when occupancy rates are declining. VA data show the average number of veterans receiving care in a SVH declined 6 percent between 2019 and 2020. In addition, the CARES Act included $150 million for SVH construction grants to prevent, prepare for, and respond to COVID-19.[181]

Overview of Key Issues

Routine inspections of SVHs have stopped. In March 2020, VA instructed its contractor to stop routine inspections of SVHs, which had been conducted in person, due to concerns about COVID-19. As of September 2020, these inspections had not resumed, and VA issued a stop work order instructing its contractor to halt annual inspections until November 20, 2020. VA policy requires that every SVH be inspected at least annually.[182]

According to VA, it is exploring options to resume annual inspections of SVHs, such as using a mix of virtual and on-site inspection processes.[183] Surges in cases of COVID-19, safety of airline travel, and national contracts for SVH inspections not designed to be conducted virtually are all factors affecting when and how in-person inspections will resume. However, VA does not have a plan for how it will assess these factors to determine how and when to continue annual inspections. If VA—the federal agency that conducts routine inspections on the quality of care for all SVHs—is not conducting these inspections, it cannot ensure the quality of nursing home care provided to veterans. This leaves veterans at risk of receiving poor quality care. Further, VA does not have information on deficiencies at all SVHs and therefore cannot track this information to help identify trends and make any necessary improvements in quality across these homes.

VA officials said that in the absence of routine inspections, VA can initiate a for-cause inspection of a SVH to review specific single or series of incidents, complaints, deficiencies, or events that may jeopardize the health or safety of residents.

According to VA officials and its contractor, from July to September 2020, VA has initiated four for-cause inspections at SVHs, which were conducted in-person.
  • One inspection was initiated for concerns related to a COVID-19 outbreak. The contractor found that the facility was in full compliance, and all infection control steps had been taken to prevent the spread of COVID-19.
  • The other three inspections were for non-COVID-19 concerns, such as resident falls. The contractor identified deficiencies at one of the three SVHs.

Other inspections of long-term care facilities have continued during the pandemic. For example:
  • VA has directed CLCs to use a self-assessment process to adapt the inspection process for COVID-19 during the pandemic.
  • CMS is using a targeted infection survey or high-priority complaint investigation for the nation’s more than 15,000 Medicare- and Medicaid-certified nursing homes, including approximately two-thirds of SVHs, which continues during the pandemic.[184] (See our Nursing Homes enclosure.) However, because approximately one-third of SVHs are not subject to CMS oversight, these SVHs have not been subject to these inspections and, therefore, have had no routine federal inspections during the pandemic.[185]

COVID-19 guidance. In response to COVID-19, VA has communicated with SVHs on a range of issues. For example:
  • noting the steps it took in its CLCs to address COVID-19, including daily assessments of staff and residents for symptoms of COVID-19, limiting the number of visitors, and social distancing procedures;
  • recommending SVHs follow guidance from CDC, CMS, and their specific state’s public health department regarding COVID-19 management and prevention;
  • expanding telehealth capabilities to reduce COVID-19 exposure risk for veterans at SVHs;
  • contacting their respective local VA medical centers for informal coaching on best practices in SVH operations, patient care, and employee safety; and
  • requesting VA assistance through VA’s civilian public health response efforts and ensuring SVHs receive per diem payments through the CARES Act waivers, according to officials from the National Association of State Veterans Homes (NASVH). As of October 2020, VA officials told us that it has supported the needs of 86 SVHs—including obtaining staff, testing, and PPE—in 38 states and the District of Columbia as they respond to COVID-19.[186]

VA officials said it will continue to provide guidance and assistance to SVHs as requested or needed.

Challenges to using construction grants. NASVH representatives stated that SVHs planned to use the $150 million in additional construction grants provided by the CARES Act to fund a range of projects to help respond to the pandemic, such as building additional rooms to allow for separating residents in quarantine or for PPE storage, and making upgrades like adding in-wall oxygen to rooms. However, NASVH officials said few SVHs were able to use the additional funds because they were made available near the end of the annual VA grant cycle.

In addition, NASVH officials identified concerns in SVHs’ securing the required matching state funding, which could prevent some SVHs from taking advantage of the additional funding.[187] Specifically, according to VA and NASVH, there are an estimated 80 pending grant requests with a total estimated federal contribution of nearly $1.2 billion. This includes $500 million for grants with state matching funds to address priorities such as life and safety concerns, and $700 million for grants for which the state needs to find matching funds to receive the federal contribution. VA said the state cost-sharing requirement increases accountability and lowers the risk for fraud and waste.

Tracking COVID-19 cases and deaths. Timely and accurate data on the number of COVID-19 cases and deaths in each SVH is useful for monitoring trends in infection rates, identifying which SVHs have already experienced an outbreak, and overseeing whether SVHs have appropriately and effectively taken steps to prevent and mitigate the spread of COVID-19 to protect residents. For example, CMS requires nursing homes it inspects, which as previously discussed includes approximately two-thirds of SVHs, to submit cases and deaths among residents and staff weekly to CDC. CMS uses this information to track trends and direct targeted response efforts, including COVID-19 testing.[188]

VA officials told us they use an informal process where each Veterans Integrated Service Network reaches out to SVHs in its jurisdiction bi-monthly to document COVID-19 cases among staff and residents, recovered cases, and deaths. According to VA, it does not collect more timely data because SVHs are not required to report these data to VA. Federal internal control standards state that management should use quality information and externally communicate the necessary information to achieve the entity’s objectives. If VA does not have timely data on the number of COVID-19 cases and deaths occurring at each SVH, and does not share this information with its inspection contractor, then it cannot monitor the spread of COVID-19 in SVHs and take steps to mitigate the spread and protect residents.

Agency Comments

We provided a draft of this enclosure to the Office of Management and Budget (OMB) and VA for review and comment. OMB did not have comments on this enclosure. VA provided technical and general comments on this enclosure, which we incorporated as appropriate. VA’s general comments are reproduced in appendix XI.

VA concurred with our recommendation to develop a plan to ensure that routine inspections of SVHs occur during the COVID-19 pandemic and provided a target completion date of November 2021. We urge VA to move up its targeted completion date, because it cannot ensure the quality of nursing home care provided to veterans in these facilities until it develops a plan to resume these inspections (virtually, in person, or both). Without these inspections, veterans are at risk of receiving poor quality care.

VA concurred in principle with our recommendation to collect timely data on COVID-19 cases and deaths at each SVH. Although VA agreed these data are important to understanding the impact of COVID-19 on veterans living in SVHs, it has not required states to report all COVID-19-related deaths at SVHs. VA stated that it would continue to evaluate its voluntary reporting process and provided a target completion date of April 2021. We reiterate the importance of having timely data on COVID-19 cases and deaths at SVHs, because as the country proceeds through the winter months, some experts suggest the number of COVID-19 cases and deaths could increase.

GAO’s Methodology

To conduct this work, we reviewed VA guidance and documents, federal laws, and written responses from VA about its oversight of and support to SVHs during the pandemic. In addition, we interviewed officials from NASVH and VA’s inspection contractor about VA’s response to COVID-19 in SVHs.

Contact information: Debra A. Draper, (202) 512-7114, draperd@gao.gov; Sharon Silas, (202) 512-7114, silass@gao.gov

Related GAO Products

VA Health Care: VA Needs to Continue to Strengthen Its Oversight of Quality of State Veterans Homes. GAO-20-697T. Washington, D.C.: July 29, 2020.

VA Nursing Home Care: VA Has Opportunities to Enhance Its Oversight and Provide More Comprehensive Information on Its Website. GAO-19-428. Washington, D.C.: July 3, 2019.

Military Health

The Department of Defense continues to pursue a multipronged approach to protect servicemembers from COVID-19, which includes testing and public health measures, as well as investing about $1.64 billion from the CARES Act for fiscal years 2020 through 2021 toward a variety of medical research and development projects for COVID-19 countermeasures.

Entity involved: Defense Health Agency, within the Department of Defense

Key Considerations and Future GAO Work

We plan to continue to monitor the Department of Defense’s (DOD) health protection efforts for servicemembers, including COVID-19 testing and ongoing research and development projects as part of the response to and recovery from the COVID-19 pandemic.

Background

Congress appropriated $3.8 billion to DOD’s Defense Health Program to prevent, prepare for, and respond to the COVID-19 pandemic, domestically or internationally.[189] DOD, through the Defense Health Program, provides worldwide medical services to active-duty and other eligible beneficiaries, including costs associated with the delivery of TRICARE benefits. In 2019, DOD operated 475 military Medical Treatment Facilities to deliver care to the approximately 9.6 million individuals eligible for DOD health care services, including active-duty and retired servicemembers and their dependents.

For fiscal years 2020 through 2021, DOD has allocated approximately $1.64 billion from the CARES Act—including $1.35 billion from the Defense Health Program and $291 million from the CARES Act for Defense-wide Research, Development, Test and Evaluation—to support medical research and development efforts for COVID-19, including vaccines, diagnostics, and therapeutics through partnerships between military health system components and various academic and commercial partners.[190] DOD has a long-standing medical research and development program with projects across various areas of the medical field, including infectious diseases.

The Under Secretary of Defense for Personnel and Readiness and the Assistant Secretary of Defense for Health Affairs oversee DOD’s COVID-19 medical research and development efforts. DOD’s COVID-19 medical research and development funding is overseen by the Assistant Secretary of Defense for Health Affairs and the Under Secretary of Defense for Research and Engineering. DOD has a number of organizations that conduct and sponsor medical research, such as the U.S. Army Medical Research and Development Command; the Air Force Research Laboratory; the Navy Medical Research Center; the Uniformed Services University of the Health Sciences; the Joint Program Executive Office for Chemical, Biological, Radiological, and Nuclear Defense; and the Defense Advanced Research Projects Agency.

Overview of Key Issues

As of September 30, 2020, DOD reported 66,375 cumulative, confirmed cases of COVID-19 among military servicemembers, their dependents, civilians, and contractors (see table), an increase of 14 percent since our last report in September 2020.[191] Specifically, as new COVID-19 cases were reported, the cumulative incidence of COVID-19 among the servicemember population increased over this time period from 2,367 per 100,000 servicemembers to 3,408 per 100,000 servicemembers. Reserve and National Guard members account for approximately 21 percent of cumulative cases of COVID-19 among servicemembers.
Number of COVID-19 Cases Reported by the Department of Defense, as of September 30, 2020

Cumulative cases

Hospitalizations

Deaths

Military servicemembers
45,759618

8

Active component

36,374

458

1

Reserve

4,143

118

5

National Guard

5,242

42

2

Dependents

6,092

131

7

Civilians

10,210

437

59

Contractors

4,314

181

22

Total

66,375

1,367

96
Source: GAO analysis of data from the Department of Defense’s (DOD) COVID-19 Task Force. I GAO-21-191.

Note: A confirmed COVID-19 case in DOD is defined by a positive laboratory test.

According to DOD officials, the department continues to address the COVID-19 pandemic within its workforces by applying a conditions-based approach to prevention and mitigation, which includes testing, closely monitoring health surveillance data (e.g., COVID-19 testing positivity rates and cases data, among other indicators), leveraging DOD’s public health emergency management protocols at installations worldwide, and implementing updated guidelines from the Centers for Disease Control and Prevention, among other things. Concurrently, and in tandem with whole-of-government efforts, DOD is investing in COVID-19 medical research and development projects (“projects”) for vaccines, therapeutic treatments, and new and improved testing capabilities for the benefit of servicemembers and the general population.[192] These types of capabilities are referred to collectively as “medical countermeasures.” In preparation for the availability of a COVID-19 vaccine, DOD is also developing a distribution plan to administer doses across workforces and beneficiaries.

Medical countermeasures research and development projects. According to DOD officials, the department’s strategy for COVID-19 research and development is designed to achieve a balance of short- and long-term countermeasures projects. This strategy includes projects that complement government-wide efforts with applicability for the general population, and those that are specifically tailored to DOD’s unique operational and population needs. Short-term projects are those aligned with the expedited time frames of the federal government’s Operation Warp Speed. Longer term projects, according to DOD officials, are those that may provide enhanced capabilities, such as easier storage and distribution for the DOD population, a portion of which operates in remote locations across the globe without ready access to a medical facility.

According to DOD officials, in January 2020, department leaders decided to initiate medical countermeasure projects for COVID-19 in response to the increasing numbers of COVID-19 cases in Asia among the general population.[193] To do so prior to a supplemental appropriation, DOD officials stated that they initially applied base budget funding from the Defense Health Program funds toward new research and development for COVID-19 medical countermeasures. However, they stated that most of DOD’s portfolio of COVID-19 medical countermeasures projects are now funded by supplemental appropriations through the CARES Act.

As of September 2020, DOD was applying about $1.64 billion allocated from the CARES Act toward the advancement of the COVID-19 medical countermeasures portfolio, and a wide variety of other supporting research studies to improve knowledge about the SARS-CoV-2 virus and COVID-19 in servicemember populations (e.g., transmission, incidence, disease course, and immunological response), testing technology, and manufacturing of medical countermeasures. According to DOD officials, DOD entities oversee and manage the projects, while academic and commercial partners execute much of the day-to-day clinical work on many projects through a combination of grants, cooperative agreements, and contracts. Moreover, DOD provides infrastructure and manufacturing support to COVID-19 medical countermeasures projects. For example, by leveraging the department’s clinical trial networks, DOD officials stated that they were able to quickly establish protocols to understand the natural history of COVID-19 and have supported clinical studies evaluating investigational medical countermeasures.[194]

DOD’s portfolio of medical countermeasures investments for COVID-19 through fiscal year 2021 includes a mix of vaccines, diagnostics, and therapeutics in varying stages of maturity.
  • Vaccines. DOD has five vaccine development projects. Three of these projects could have applications for the general population, but are not candidates of Operation Warp Speed, according to DOD officials. DOD officials also stated that the department’s Advanced Development and Manufacturing facility is already producing thousands of doses of one vaccine candidate for availability by the end of 2020.[195] The other vaccine projects are being designed to more specifically meet the operational needs of the department, such as qualities that allow for storage and use in more austere locations, according to DOD officials.

    According to DOD documentation, the department’s vaccine investments are leveraging platforms and technologies available within the department, and those of established partners. In addition, DOD is leveraging its capabilities in support of an Operation Warp Speed vaccine candidate that the Department of Health and Human Services is sponsoring and funding through a public-private partnership with AstraZeneca. Specifically, DOD announced in September 2020 that it will support Phase III clinical trials at five of its military Medical Treatment Facilities.
  • Diagnostics. DOD is investing in a spectrum of diagnostic testing capabilities. According to DOD officials, testing will continue to be a critical component of addressing the COVID-19 threat even after vaccines and therapeutics are developed. The diagnostic testing-based projects include a mixture of molecular, antigen, and serology testing.[196] DOD officials stated that the department’s existing relationships with industry partners has facilitated development and emergency use authorizations from the Food and Drug Administration (FDA) for molecular diagnostic tests and associated platforms. According to DOD documentation, investments in antigen testing aim to establish quick and easy access to testing supplies to increase the screening of large groups of symptomatic individuals. DOD’s serology testing projects aim to expand knowledge about the presence of antibodies, and how, when, and where antibodies can be utilized in the COVID-19 response. DOD officials stated that the department’s vast serum repository, which includes samples from every servicemember collected at least every 2 years, is a substantial and unique asset for advancing knowledge about antibodies.
  • Therapeutics. DOD’s therapeutics-based projects are focused on managing positive COVID-19 cases using appropriate therapeutic agents and treatments. Similar to reasons for investing in new and improved testing capabilities, DOD officials stated that investments in therapeutics are critical for ensuring a balanced strategy of countermeasures to address COVID-19 even after a vaccine becomes available. DOD investment areas for therapeutics include antivirals, anti-inflammatories, plasma products, and antibodies. According to DOD officials, the department sponsored the development of an antiviral pharmaceutical, remdesivir, which is now used as a COVID-19 treatment after receiving an emergency use authorization from the FDA for that indication. DOD officials also stated that, at the outset of COVID-19, the department pivoted its antibody discovery pipeline toward rapid development of monoclonal and polyclonal antibodies targeted against SARS-CoV-2.

Since that time, according to DOD officials, several of the department’s antibody discoveries have been licensed by pharmaceutical companies for clinical development and commercial manufacturing. Additionally, DOD is investing to increase manufacturing capabilities for therapeutics for the short term (through December 2020) and the long term (through calendar year 2021). For example, DOD’s Advanced Development and Manufacturing Facility is producing monoclonal antibody doses that are expected to be available by the end of 2020, according to DOD officials.

Vaccine distribution plan. In preparation for the FDA’s issuance of an emergency use authorization for one or more COVID-19 vaccines later in 2020 or in 2021, the Defense Health Agency established a COVID-19 vaccine working group of subject matter experts with representation from across the department, such as the military services and the Joint Staff. According to the Joint Staff Surgeon, various multidisciplinary DOD teams are collaborating with the vaccine working group to plan for the information technology, logistics, and public health requirements for vaccine distribution both within military medical treatment facilities and expeditionary, or deployed, settings. The Deputy Secretary of Defense and the Vice Chairman of the Joint Chiefs of Staff—as co-chairs of DOD’s COVID-19 Task Force—oversee the working group.

According to Defense Health Agency officials, the working group has been drafting an implementation plan supporting COVID-19 vaccine distribution. They stated that the uncertainties about which vaccine (or vaccines) will be authorized and the timing of their availability pose a challenge at this stage of planning for distribution. DOD would need to seek a waiver from the President to require servicemembers to receive a COVID-19 vaccination, should the vaccine’s emergency use authorization include an option to decline vaccination. The working group anticipates that mass immunization events will likely be required, and vaccination prioritization tiers will be needed due to vaccine supply limitations.

DOD is communicating updates to its military Medical Treatment Facilities about vaccines in development and how the facilities may start to prepare for the receipt of one or more vaccines for SARS-CoV-2. Among other preparation steps, the DOD working group is
  • developing policy and guidance on vaccine administration; working on ordering procedures and cold chain management requirements for the unique shipping and storage needs anticipated for one or more SARS-CoV-2 vaccines; establishing a public website;
  • developing webinars and podcasts for immunization personnel along with clinicians, leaders, and vaccine recipients; and
  • providing education and training to immunization personnel, including a competency assessment checklist.

Agency Comments

We provided a draft of this enclosure to DOD and the Office of Management and Budget (OMB) for review and comment. DOD provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not have comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed DOD guidance and the most recent DOD data available as of September 30, 2020. We also interviewed DOD officials knowledgeable about COVID-19 response efforts and reviewed publicly available DOD media reports, statements, and documents. The data were provided to us by the DOD COVID-19 Task Force, which maintains the COVID-19 data of record for the department and reports them to senior DOD leaders. To assess the reliability of the data on COVID-19 cases among servicemembers, dependents, civilians, and contractors, we discussed the data with agency officials, reviewed the data for outliers or obvious errors, and reviewed relevant DOD documents. We determined that the data were sufficiently reliable for the purposes of this enclosure. However, we did not independently review the data for accuracy.

Contact information: Brenda S. Farrell, (202) 512-3604, farrellb@gao.gov

Defense Support of Civil Authorities

The Department of Defense’s support to civil authorities continued to decrease since the peak of the department’s COVID-19 pandemic response efforts in April 2020, as civil authorities became better equipped to manage the response and the need for the department’s assistance declined.

Entities involved: Department of Defense, including its active-duty, reserve, and National Guard forces; the U.S. Army Corps of Engineers; and the Defense Logistics Agency

Key Considerations and Future GAO Work

We continue to examine the support the Department of Defense (DOD) provides to civil authorities as part of the response to and recovery from the COVID-19 pandemic, and the coordination among the federal agencies supporting the pandemic response.

Background

DOD has played a prominent role in supporting civil authorities’ response to the COVID-19 pandemic, in addition to other natural and man-made emergencies, such as wildfires, hurricanes, and civil unrest. DOD provides such support through its Defense Support of Civil Authorities mission, and is authorized to do so when requested by another federal agency and approved by the Secretary of Defense or when directed by the President.[197] In a series of presidential memorandums sent to the Secretaries of Defense and Homeland Security during March, April, May, and June 2020, the Federal Emergency Management Agency (FEMA) was directed to fund 100 percent of emergency assistance associated with COVID-19 response activities undertaken by state National Guards.[198]

In the CARES Act, Congress appropriated approximately $1.5 billion for National Guard personnel and operations expenses incurred in responding to COVID-19 to prevent, prepare for, and respond to the coronavirus domestically or internationally.[199] These amounts were required to be obligated by September 30, 2020. Section 13001 of the CARES Act authorized DOD to transfer amounts appropriated to the department by the act to other applicable DOD appropriations for expenses incurred in preventing, preparing for, or responding to COVID-19, including in support of other federal departments and agencies, and state, local, and tribal governments.[200]

Subsequently, an April 1, 2020, memorandum signed by the acting Undersecretary of Defense (Comptroller) stated that transfers under section 13001 may be made only to meet the department’s requirements, stating that DOD does not receive appropriations for, and has no authority to provide National Guard support to, federal agencies, states, or local, territorial, or tribal governments on a nonreimbursable basis. Therefore, the transfer authority provided under section 13001 does not authorize DOD to use its appropriations to support non-DOD entities.[201]

As of September 30, 2020, the department reprogrammed approximately $1.28 billion of the approximately $1.5 billion appropriated to the Army and Air National Guards’ Personnel and Operations and Maintenance accounts to other DOD appropriations.[202] According to USAspending.gov, as of August 31, 2020, the National Guard had obligated about $111.5 million and spent about $50.9 million of the $1.5 billion it received from the CARES Act.[203] See table below for details about the use and transfer of these funds.
Funds Available for the Department of Defense to Transfer from the CARES Act Appropriations for the Army and Air National Guards’ Personnel and Operations and Maintenance Accounts

Account

Total appropriationsa
($ thousands)

Total obligationsb
($ thousands)

Total expendituresb
($ thousands)

Funds made available for transferc
($ thousands)

Personnel, total

1,228,716

56,089

41,111

1,101,743

Army National Guard

746,591

51,353

38,920

677,004

Air National Guard

482,125

4,736

2,191

424,739

Operation and Maintenance, total

262,450

55,401

9,788

180,932

Army National Guard

186,696

51,730

7,671

122,132

Air National Guard

75,754

3,671

2,117

58,800

Total

1,491,166

111,490

50,899

1,282,675
Source: GAO analysis of Department of Defense and USAspending.gov data. I GAO-21-191.

Note: In October 2020, Department of Defense (Comptroller) officials told us that the department’s report on CARES Act expenditures through the end of fiscal year 2020 would not be available until early November 2020–after the period of our review.
aAppropriation amounts were identified through the CARES Act.
bObligation and expenditure amounts were obtained from USASpending.gov, accessed on October 19, 2020. These amounts were identified as of August 31, 2020. We plan to obtain final obligation and expenditure amounts from DOD once they become available in November 2020.
cFunds made available for transfer were identified through DOD’s internal reprogramming actions and information provided National Guard officials. These amounts were identified as of September 30, 2020.

According to a September 2020 DOD reprogramming action, the department, for example, transferred $24.4 million from the Army National Guard’s Personnel account to the Army Research, Development, Test, and Evaluation account. According to the reprogramming action, the funds were available due to the increased use of Army National Guard members for additional FEMA mission assignments and the use of base Military Personnel appropriated funds to support COVID-19 costs. The reprogramming action also stated that the funds were needed to assess COVID-19 testing capability for the Army force and would be used to evaluate the viability and reliability of two COVID-19 testing systems for operational settings. We will continue to work with the DOD Comptroller’s office to obtain additional detailed information on these reprogramming actions and the accounts to which these funds were transferred, and plan to report our findings in a future update.

According to DOD’s May 2020 CARES Act Spend Plan, the department requested that CARES Act funding for DOD’s support of states’ COVID-19 response be provided as an appropriation into the Emergency Response Fund, Defense account along with the authority for DOD to provide nonreimbursable support to other federal departments, states, local, and tribal governments.[204] Congress, however, chose to appropriate CARES Act amounts into existing National Guard accounts without authority for DOD to provide nonreimbursable assistance. Additionally, as noted previously, a series of presidential memorandums directed FEMA to fund 100 percent of emergency assistance associated with COVID-19 response activities undertaken by the National Guard.

As we noted in our September 2020 report, DOD officials stated that the total amounts appropriated to the National Guard in the CARES Act could not be fully obligated before they expired at the end of fiscal year 2020. DOD officials further stated that National Guard support to the states for the COVID-19 response was fully reimbursed by FEMA. Consequently, amounts appropriated to the National Guard in support of states’ COVID-19 response were identified as available for transfer to other DOD accounts for COVID-19-related priority activities.

Overview of Key Issues

DOD support efforts. According to DOD officials, as of September 30, 2020, DOD had received 368 FEMA mission assignments and other requests for assistance.[205] Further, as of September 30, 2020, approximately 40 active-duty medical personnel were providing support under FEMA mission assignments, and an additional 93 medical personnel were in a restriction of movement status after supporting a FEMA mission in Texas. In addition, as of September 30, 2020, more than 16,000 National Guard members remained on orders in 43 states and 3 territories to support the response to COVID-19,[206] which is fewer than half of the number of National Guard personnel on orders at the peak of the response in spring 2020.[207]

According to DOD officials, the department’s support to the states has continued to shift over the course of the pandemic, particularly as civil authorities became better equipped to manage the response and the demand for medical and other assistance from the department declined. For example, the focus of the initial response was on building field hospitals and providing staff for those facilities; however, the focus of the more recent support was on sending DOD medical personnel into local hospitals to augment the medical staff. According to officials, DOD medical personnel will be sent in when the need for medical support exceeds local capabilities or what the Department of Health and Human Services can provide. Officials explained that this approach has also facilitated the department’s efforts to balance internal requirements with the demand for support from the states.

According to the National Guard Bureau, the vast majority of the support currently provided by the National Guard is related to testing and screening activities. The following are examples of civil support provided by the National Guard through September 2020:
  • Testing and screening. National Guard members in 44 states and territories, including Alaska, California, Colorado, Florida, and Ohio, assisted with testing and screening for COVID-19. This remains the priority effort for National Guard support in the states. For example, Florida National Guard support to the state’s testing efforts has assisted in the testing of more than 1,400,000 residents for COVID-19.
  • Warehouse operations and supplies. In 36 states and territories, National Guard members provided support to warehouse operations. For example, Vermont National Guard members continue to support Strategic National Stockpile warehouse operations and reception of FEMA deliveries. Colorado National Guard members assisted with inventorying supplies and distributing personal protective equipment to public schools.
  • Food bank and program support. National Guard members in 24 states and territories are providing support to food banks. For example, California National Guard members have provided such support to, among other things, help ensure continuity.
  • Nursing home support. California National Guard members assisted by backfilling staff shortages at skilled nursing facilities. National Guard members in Ohio also provided support to nursing homes and other long-term care facilitates.
  • COVID-19 mapping. National Guard members in 15 states and territories, including Colorado, Nevada, and Washington are supporting COVID-19 mapping. The states are working with health departments to manage and analyze data.

Reimbursement for National Guard support. In a series of presidential memorandums issued in spring 2020, the White House provided for the use of National Guard forces to assist FEMA with emergency assistance associated with the COVID-19 response to states. The White House memorandums also directed that FEMA fund 100 percent of the support provided by the National Guard forces. In a June 2, 2020, memorandum, the White House extended this authorization through August 21, 2020.[208]

A presidential memorandum issued on August 3, 2020, terminated the requirement that FEMA fund 100 percent of that National Guard costs for providing assistance to the majority of states as of August 21, 2020.[209] Instead, FEMA was directed to fund 75 percent of the emergency assistance activities associated with preventing, mitigating, and responding to the threat to public health and safety posed by COVID-19 in the named states through December 31, 2020.[210] As a result of this change, certain states became responsible for reimbursing FEMA for 25 percent of the cost of their National Guard’s support to the COVID-19 response after August 21, 2020.

Subsequent presidential memorandums issued throughout August 2020 extended 100-percent cost sharing through December 31, 2020, for Florida and Texas, and restored 100-percent cost sharing through September 30, 2020, for Arizona, California, Louisiana, and Connecticut.[211]

According to DOD officials, historically the department has been reimbursed for 100 percent of the costs of providing National Guard assistance when supporting states and territories and, therefore, any changes to the percentage funded by the federal government through other agencies does not impact department’s response.[212] DOD officials stated that federal agencies, such as FEMA, and states are typically required to share the cost of National Guard assistance because states bear some responsibility for funding their response efforts. DOD officials further stated that support for the COVID-19 pandemic has been different than other support missions—such as responding to a hurricane––because the COVID-19 pandemic has impacted all states and U.S. territories and necessitated a response from them.

According to National Guard Bureau officials, the states are evaluating the level of support they can maintain, given the portion that they are required to fund. National Guard officials further stated that some states adjusted the number of National Guard members providing support based on their budgets. In addition, they also stated that many states have asked for the cost-share ratio be re-evaluated.

Agency Comments

We provided a draft of this enclosure to DOD and the Office of Management and Budget (OMB) for review and comment. DOD provided technical comments on this enclosure, which we incorporated as appropriate. OMB did not have comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed documentation and the most recent data available from DOD through September 30, 2020, and USAspending.gov through August 31, 2020, and interviewed DOD officials.

Contact information: Diana Maurer, (202) 512-9627, maurerd@gao.gov.

HHS COVID-19 Funding

The COVID-19 relief laws appropriated more than $250 billion to the Department of Health and Human Services to address various aspects of the public health response to COVID-19. About $163 billion (65 percent) had been obligated and about $117 billion (47 percent) had been expended as of October 31, 2020, according to department officials. This represents an increase of about 13 percent and 18 percent since July 31, 2020, when reported obligations and expenditures were $144 billion and $99 billion, respectively.

Entity involved: Department of Health and Human Services

Key Considerations and Future GAO Work

We will continue to examine the Department of Health and Human Services’ (HHS) use of appropriations contained in four relief laws enacted to help fund the COVID-19 response. Specifically, we will examine the status of obligations and expenditures of these funds; the activities funded, including how those activities were determined; and efforts to monitor funding use and any related challenges.

Background

HHS received approximately $251 billion in supplemental appropriations from four relief laws enacted to assist the response to COVID-19 (see table below).[213]
Supplemental Appropriations to HHS for COVID-19 Response

Legislation

Appropriations
($ millions)

Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020
(Pub. L. No. 116-123)

6,497.0

Families First Coronavirus Response
Act (Pub. L. No. 116-127)

1,314.0

CARES Act
(Pub. L. No. 116-136)

142, 833.4

Paycheck Protection Program and Health Care Enhancement Act
(Pub. L. No. 116-139)

100,000.0

Total

250,644.1
Source: Department of Health and Human Services (HHS) data and GAO analysis of appropriation warrant information provided by the Department of the Treasury. | GAO-21-191

Note: HHS reported that of its total COVID-19 supplemental appropriations, the agency transferred $289 million to the Department of Homeland Security, and $300 million in appropriations are not available until HHS takes certain actions.

Overview of Key Issues

Of the approximately $251 billion appropriated, HHS reported that it had obligated about $163 billion and expended about $117 billion, as of October 31, 2020—an increase of about 13 percent and 18 percent respectively since July 31, 2020. (See figure below.)

Supplemental Appropriations to HHS for COVID-19 Response and HHS’s Reported Obligations and Expenditures, as of October 31, 2020

HHS reported appropriations, obligations, and expenditures by agency. As of October 31, 2020, the Indian Health Service had expended the largest portion of their supplemental appropriations (59 percent). The following table provides HHS’s reported appropriations, obligations, and expenditures by HHS agency.
Department of Health and Human Services (HHS) Reported Appropriations, Obligations, and Expenditures for COVID-19 Response, by Agency, as of October 31, 2020

Agency or key fund

Appropriations
($ millions)

Obligations
($ millions)

Expenditures
($ millions)

Administration for Children and Families

6,274.0

6,198.0

2,362.5

Administration for Community Living

1,205.0

1,205.0

541.3

Agency for Toxic Substances and Disease Registry

12.5

12.3

1.9

Centers for Disease Control and Prevention

6,500.0

3,729.0

967.9

Centers for Medicare & Medicaid Servicesa

200.0

84.2

14.7

Food and Drug Administration

141.0

41.8

10.8

Health Resources and Services Administration

1,320.0

1,319.3

659.9

Indian Health Service

1,096.0

732.1

647.8

National Institutes of Health

1,781.4

863.9

158.7

Public Health and Social Services Emergency Fund (PHSSEF)b

231,689.6

148,166.0

111,770.3

Office of the Assistant Secretary for Preparedness and Responsec

12,393.0

10,364.0

4,986.8

Biomedical Advanced Research and Development Authorityc

17,838.6

16,318.3

1,923.9

Provider Relief Fundc

175,000.0

104,467.1

101,432.0

Testing for uninsured c

2,000.0

668.9

667.3

Other PHSSEFc

24,458.0

16,347.7

2,760.3

Substance Abuse and Mental Health Services Administration

425.0

423.3

26.0

Total

250,644.4

162,774.9

117,161.8
Source: Department of Health and Human Service (HHS) data. | GAO-21-191

Note: The COVID-19 relief laws included provisions for HHS to transfer appropriated funds to various HHS agencies. HHS also reported that of its total COVID-19 appropriation, the agency transferred $289 million to the Department of Homeland Security, and $300 million in appropriations are not available until HHS takes certain actions.
aThese amounts do not reflect Medicaid and Medicare expenditures. As of October 31, 2020, COVID-19 related federal Medicaid expenditures totaled approximately $23 billion, or 7 percent of total federal spending on Medicaid services for January through October 2020. In addition, the Congressional Budget Office estimated that some provisions of the CARES Act will increase Medicare payments to providers by $8 billion in 2020 and 2021.
bThe Public Health and Social Services Emergency Fund (PHSSEF) is an account though which funding is provided to certain HHS offices, such as the Office of the Assistant Secretary for Preparedness and Response. Amounts have been appropriated to this fund for the COVID-19 response to support certain HHS agencies and response activities. PHSSEF appropriations transferred to other HHS agencies or key funds not specifically listed are included under “Other PHSSEF.” For example, the Health Resources and Services Administration received $975 million in transfers from the PHSSEF, and this is represented in the table in “Other PHSSEF.”
cThe italicized amounts are subtotals of the PHSSEF and are not added in the total since they are included in the PHSSEF amount. Italicized amounts listed under the PHSSEF appropriations column are HHS allocations based on appropriations made in the relief laws and approved allotment decisions made by HHS in coordination with the Office of Management and Budget. The Provider Relief Fund reimburses eligible health care providers for health care related expenses or lost revenues that are attributable to COVID-19. The CARES Act and Paycheck Protection Program and Health Care Enhancement Act appropriated $175 billion for provider relief. In addition, the Families First Coronavirus Response Act appropriated $1 billion and the Paycheck Protection Program and Health Care Enhancement Act appropriated up to $1 billion to reimburse providers for COVID-19 testing for uninsured individuals. Provider Relief Fund expenditures also may be referred to as disbursements.

HHS reported allocations, obligations, and expenditures for a variety of COVID-19 response activities, including activities to support testing, the development of vaccines or therapeutics, and the acquisition of critical supplies. As of October 31, 2020, 58 percent of funds allocated to the Provider Relief Fund had been expended, compared with less than 5 percent of the funding allocated each for telehealth and global disease detection. The following table provides HHS’s reported allocations, obligations, and expenditures by selected key response activity.
Department of Health and Human Services (HHS) Reported Allocations, Obligations, and Expenditures for COVID-19 Response, by Selected Key Response Activity, as of October 31, 2020

Key activity

Total HHS allocations
($ millions)

Total HHS obligations
($ millions)

Total HHS expenditures
($ millions)

Health centersa

2,020.0

2,018.3

927.5

Head Start

750.0

743.3

182.1

Provider Relief Fundb

175,000.0

104,467.1

101,432.0

Testing for uninsured

2,000.0

668.9

667.3

Support to state, local, territorial, and tribal organizations for preparedness

13,990.0

13,133.8

1,769.4

Strategic National Stockpile

10,669.9

8,904.4

4,061.2

Telehealth

175.0

39.7

4.8

Testing

4,491.8

3,544.5

981.4

Vaccines

13,814.7

13,341.0

1,279.3

Drugs and therapeutics

3,013.0

2,796.4

622.1

Global disease detection and emergency response

800.0

250.1

37.4

Other response activitiesc

23,920.0

12,867.4

5,197.3

Total

250,644.4

162,774.9

117,161.8
Source: Department of Health and Human Services (HHS) data. | GAO-21-191

Note: HHS reported allocations, obligations, and expenditures for these activities based on the primary programmatic recipient organization of the funds, although some activities apply to multiple categories. For example, certain funds in the “support to state, local, territorial, and tribal organizations for preparedness” category were provided for testing but are not reflected in the “testing” category. According to HHS officials, the allocations reported for the key activities above are based on amounts appropriated for these activities in the relief laws and approved allotment decisions made by HHS in coordination with the Office of Management and Budget.
aHealth centers provide a comprehensive set of primary and preventative health care services to individuals regardless of their ability to pay. Approximately $17 million of this funding is for Health Center Program look-alikes, which are centers that do not receive Health Center Program funding but meet program requirements.
bThe Provider Relief Fund reimburses eligible health care providers for health care related expenses or lost revenues that are attributable to COVID-19. The CARES Act and Paycheck Protection Program and Health Care Enhancement Act appropriated $175 billion for provider relief. In addition, the Families First Coronavirus Response Act appropriated $1 billion and the Paycheck Protection Program and Health Care Enhancement Act appropriated up to $1 billion to reimburse providers for COVID-19 testing for uninsured individuals. Provider Relief Fund expenditures may also be referred to as disbursements.
cAccording to HHS officials, other response activities include Centers for Disease Control and Prevention agency-wide activities and program support, health care preparedness and response activities, Biomedical Advanced Research and Development Authority diagnostics development, and various activities conducted by the National Institutes of Health.

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS and OMB did not provide comments on this enclosure.

GAO’s Methodology

We requested, and HHS provided, data on appropriations, allocations, obligations, and expenditures by HHS agency and by key response activity, as of October 31, 2020. We also obtained and analyzed appropriation warrant information provided by the Department of the Treasury as of May 31, 2020. To assess the reliability of the data reported by HHS, we reviewed information from the federal spending database, USAspending.gov, as well as HHS’s spending database, taggs.hhs.gov, and HHS’s documentation on spending, and we determined that the data were sufficiently reliable for the purposes of our reporting objective.[214] We also reviewed the four relief laws enacted to assist the response to COVID-19.

Contact information: Carolyn L. Yocom, (202) 512-7114, yocomc@gao.gov

Health Disparities

Data collected or made available by the Department of Health and Human Services on indicators of COVID-19 are incomplete, but available data continue to demonstrate racial and ethnic disparities.

Entities involved: Department of Health and Human Services, including the Centers for Disease Control and Prevention, Centers for Medicare & Medicaid Services, Health Resources and Services Administration, Indian Health Service, National Institutes of Health, Office of the Assistant Secretary for Health, and Office of Minority Health

Key Considerations and Future GAO Work

The Department of Health and Human Services (HHS), including the Centers for Disease Control and Prevention (CDC), collects and makes some data available on indicators of COVID-19 by race and ethnicity, but gaps exist in these data, particularly in four areas:
  • Testing. Both race and ethnicity information was missing for 82.0 percent of COVID-19 laboratory tests reported to CDC as of October 11, 2020.[215]
  • Cases. Race and ethnicity information was missing for 41.5 percent of COVID-19 cases with case report forms received by CDC, or 62.7 percent of total cases reported, as of October 20, 2020.[216]
  • Hospitalizations. CDC’s hospitalization data for COVID-19 are limited to select counties in 14 states, and race and ethnicity information are not complete in the reported data.
  • Deaths. Race and ethnicity data were missing for 14.0 percent of COVID-19-related deaths with case report forms received by CDC, or 44.9 percent of total deaths reported through case reporting, as of October 20, 2020.[217]

On July 22, 2020, CDC released a COVID-19 Response Health Equity Strategy to accelerate progress towards reducing disparities in indicators of COVID-19, among other efforts to achieve health equity.[218] As CDC implements its strategy, we recommended in September 2020 that the Director of CDC
  • determine whether having the authority to require states and jurisdictions to report race and ethnicity information for COVID-19 cases, hospitalizations, and deaths is necessary for ensuring more complete data, and if so, seek such authority from Congress;
  • involve key stakeholders to help ensure the complete and consistent collection of demographic data; and
  • take steps to help ensure its ability to comprehensively assess the long-term health outcomes of persons with COVID-19, including by race and ethnicity.

HHS, including CDC, agreed with the recommendations. In response to our recommendations, CDC stated that the agency is committed to having discussions with stakeholders to assess whether having the authority to require states and jurisdictions to report race and ethnicity information for COVID-19 cases would result in improved reporting. CDC also noted that the agency is convening a team to develop a plan to monitor the long-term health outcomes of persons with COVID-19 by identifying health care surveillance systems that can electronically report health conditions to state and local health departments. We will continue to conduct work examining HHS, CDC, and other component agencies’ ongoing work regarding indicators of COVID-19 and disparities that exist for various populations.

Background

HHS and its agencies, including CDC, collect and make data available on various indicators of COVID-19, including testing, cases, hospitalizations, and deaths. (See our related July 2020 report on COVID-19 data quality and considerations for modeling and analysis.) These data are collected from a variety of sources, such as health care providers, laboratories, funeral homes, and state and jurisdictional health departments. Data collected and made available by CDC on indicators of COVID-19 by race and ethnicity are important for assessing potential disparities between different racial and ethnic minority groups and can help decision-makers understand the spread and severity of COVID-19 in different populations. (See our related Health Care Indicators enclosure.)

Overview of Key Issues

Disparities by race and ethnicity in COVID-19 indicators. Though limited, available data from CDC and others demonstrate disparities in COVID-19 indicators by race and ethnicity, with racial and ethnic minorities bearing a disproportionate burden of COVID-19 positive tests, cases, hospitalizations, and deaths.
  • Testing. CDC race and ethnicity data on the percent of positive test results, while incomplete, suggest disproportionate test positivity rates for racial and ethnic minority groups. Among COVID-19 diagnostic test results reported to CDC from laboratories from 45 jurisdictions as of October 11, 2020, the percent of positive COVID-19 tests were 18.0 percent for non-Hispanic American Indian/Alaska Native, 15.1 percent for non-Hispanic Native Hawaiian or Other Pacific Islander persons, 17.9 percent for Hispanic or Latino persons, and 13.1 percent for Black persons, compared to 7.7 percent for non-Hispanic White persons.[219]
  • Cases. CDC race and ethnicity data on COVID-19 cases, while incomplete, demonstrate that racial and ethnic minority groups have been disproportionately affected.[220] Among cases with known race and ethnicity reported to CDC as of October 20, 2020, 29.4 percent of cases were for persons who were Hispanic or Latino (compared to 18 percent of the U.S. population), 17.4 percent were non-Hispanic Black (compared to 13 percent of the U.S. population), 1.2 percent were non-Hispanic American Indian/Alaska Native (compared to 0.7 percent of the U.S. population), and 45.1 percent were non-Hispanic White persons (compared to 60.1 percent of the population).[221]
  • Hospitalizations. CDC data indicate that racial and ethnic minority groups are disproportionately hospitalized with COVID-19 in select counties in 14 states included in CDC’s COVID-19-Associated Hospitalization Surveillance Network (COVID-NET).[222] According to CDC’s analysis of data in select counties in 14 states included in COVID-NET hospitalizations between March 1, 2020 and October 10, 2020, Hispanic or Latino persons were hospitalized with COVID-19 at a rate 4.5 times that of non-Hispanic White persons. Non-Hispanic American Indian/Alaska Native and non-Hispanic Black persons were hospitalized at a rate 4.4 times that of non-Hispanic White persons when adjusting for age (see figure).

Cumulative COVID-19-Associated Hospitalization Rates per 100,000 Population from Select Counties in 14 States, Adjusted for Age, by Race and Ethnicity, March 1, 2020 through October 10, 2020

Note: American Indian/Alaska Native, Asian or Pacific Islander, Black, and White persons were non-Hispanic. Hispanic or Latino persons might be of any race. Hospitalization data are from Centers for Disease Control and Prevention’s Coronavirus Disease 2019 (COVID-19)-Associated Hospitalization Surveillance Network (COVID-NET), which provides data from select counties in 14 states, representing 10 percent of the U.S. population. Age-adjusted rates, which hold constant the age distributions between different population groups, allow researchers to focus analyses on other demographics, such as race and ethnicity, without being concerned about differences that are due to different age distributions of the racial and ethnic groups. Age-adjusted rates are particularly important to consider for indicators of COVID-19 because persons in older age groups are more likely to experience hospitalizations and racial and ethnic groups have different age distributions in the U.S. population.
  • Deaths. A CDC analysis of National Center for Health Statistics (NCHS) death certificate data indicated a disproportionate number of deaths among non-Hispanic Black persons, who represent more than one in five COVID-19 deaths in the U.S.[223] As of October 7, 2020, NCHS data show that non-Hispanic Black persons died of COVID-19 at a rate almost two times higher than non-Hispanic White persons (see figure).[224]

COVID-19 Death Rates, by Race and Ethnicity, through October 7, 2020

Note: Data are from Department of Health and Human Services, Centers for Disease Control and Prevention, Report to Congress on Paycheck Protection Program and Health Care Enhancement Act Disaggregated Data on U.S. Coronavirus Disease 2019 (COVID-19) Testing, 5th 30-Day Update & COVID-19 Diagnosis, Hospitalizations, and Deaths (October 2020). American Indian/Alaska Native, Asian, Black, Native Hawaiian or Other Pacific Islander, and White persons were non-Hispanic. Hispanic or Latino persons might be of any race. Death rates include deaths reported in the U.S., and are reported by CDC/NCHS from its National Vital Statistics System (NVSS), which is the source of official statistics on deaths in the U.S. CDC noted that death certificate data are provisional, and may not include all deaths. CDC stated that over 99 percent of deaths in NVSS have race and ethnicity information.

CDC reported that the percentage of higher than expected deaths—that is, the percent increase in deaths during the COVID-19 pandemic compared to the average number of deaths from 2015 through 2019 during the same time period—also shows disparities by racial and ethnic minority groups.[225] Specifically, the highest increases in weekly deaths among Hispanic or Latino (114.7 percent), Non-Hispanic Asian (110.4 percent), and Non-Hispanic Black (112.1 percent) persons were approximately four times the highest increase in deaths among Non-Hispanic White persons (27.8 percent) (see figure).

Deaths in 2020 as a Percentage of 2015-2019 Deaths, by Race and Ethnicity, January through October 2020

Note: American Indian/Alaska Native, Asian, Black, Other or White persons were non-Hispanic. Hispanic or Latino persons might be of any race. “Other” includes non-Hispanic Native Hawaiian or other Pacific Islander, non-Hispanic multiracial, and unknown. Death data by week includes deaths reported in the U.S. as of data downloaded on November 10, 2020, from the National Center for Health Statistics’ (NCHS) National Vital Statistics System (NVSS), which is the source of official statistics on deaths in the U.S. NCHS noted that death certificate data are provisional and may not be complete, especially for the most recent weeks. Percentages greater than zero show higher than expected deaths during the COVID-19 pandemic compared to the average number of deaths from 2015 through 2019 during the same time period. Percentages were weighted to account for potential underreporting in the most recent weeks, but may not fully account for underreporting. According to NCHS, while some higher than expected deaths may be directly attributable to COVID-19, the extent to which excess deaths may be directly or indirectly attributable to COVID-19 is not yet known. See CDC’s National Center for Health Statistics webpage on excess deaths for further details: https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm, accessed on November 12, 2020.

Additional race and ethnicity disparities within age groups. Additional disparities by race and ethnicity may be observed within age groups, including persons age 65 and older who are covered by Medicare.
  • Cases. A Centers for Medicare & Medicaid Services (CMS) preliminary analysis of Medicare fee-for-service claims data and Medicare Advantage (Medicare’s managed care program) encounter data for services from January 1 through August 15, 2020, received by September 11, 2020, found racial and ethnic disparities in COVID-19 case rates. Case rates were highest for Black beneficiaries (2,799 cases per 100,000), Hispanic or Latino beneficiaries (2,627 cases per 100,000), and American Indian/Alaska Native beneficiaries (2,152 cases per 100,000) and lowest among White beneficiaries (1,272 cases per 100,000) and Asian beneficiaries (1,243 cases per 100,000).[226]
  • Hospitalizations. As part of a preliminary analysis of Medicare claims and encounter data for services from January 1 through August 15, 2020, received by September 11, 2020, CMS found racial and ethnic disparities in COVID-19 hospitalization rates among Medicare beneficiaries, with hospitalization rates highest for Black beneficiaries (1,114 hospitalizations per 100,000), American Indian/Alaska Native beneficiaries (917 hospitalizations per 100,000), and Hispanic or Latino beneficiaries (831 hospitalizations per 100,000) and lowest among White beneficiaries (303 hospitalizations per 100,000) as of August 15, 2020.[227]
  • Deaths in younger age groups. In September 2020, CDC reported that 78 percent of COVID-19 deaths in persons under age 21 were among Hispanic, non-Hispanic Black, and non-Hispanic American Indian/Alaska Native persons, according to case reporting.[228] In addition, racial and ethnic minority populations comprise a larger proportion of COVID-19 deaths at younger age groups (35-44 and 45-54), according to death certificate data (see figure).[229]
  • Deaths in older age groups. CDC also reported that as of October 7, 2020, non-Hispanic Black persons older than age 85 had the highest death rate (1,589.4 per 100,000), followed by Hispanic or Latino persons older than age 85 (1,422.4 per 100,000) and non-Hispanic American Indian/Alaskan Native persons older than age 85 (910.4 per 100,000), according to case reporting.[230] (See figure.)

Distribution of COVID-19 Deaths, by Race and Ethnicity and Age Group, through October 14, 2020

Note: American Indian/Alaska Native, Asian, Black, Native Hawaiian or Other Pacific Islander, and White persons were non-Hispanic. Hispanic or Latino persons might be of any race. Death data includes deaths reported in the U.S., and is from the National Center for Health Statistics’ (NCHS) National Vital Statistics System (NVSS), which is the source of official statistics on deaths in the U.S. NCHS noted that death certificate data are provisional, and may not be complete, especially in the most recent weeks. NVSS also provides data on individuals younger than age 35 and on individuals of more than one race and of unknown race, which were not included in this figure.

Factors potentially contributing to COVID-19 disparities. We previously reported that HHS’s Office of Minority Health, CDC, the Indian Health Service (IHS), and researchers noted various social and health-related factors that may contribute to disparities by race and ethnicity in COVID-19 disease burden. These factors included higher rates of employment in essential industries, such as service, health care, and agriculture with limited or no ability to work from home; joblessness; higher rates of uninsurance and other barriers to accessing care, such as mistrust of the health care system, language barriers, and cost of missing work; higher population density and overcrowded, multigenerational, or multi-family homes; and experiences of racism, stigma, and systemic inequities.[231]

As of October 2020, HHS’s Office of the Assistant Secretary for Health, NIH, and HRSA noted additional factors that may contribute to health disparities in indicators of COVID-19, including the following:
  • uneven geographic distribution of health resources and health care;
  • reduced access to health care and supportive services due to closure of schools, community health centers, senior centers, and home visitation programs due to COVID-19, particularly for children and women;
  • environmental health inequities such as concentration of respiratory hazards and toxic sites in low-socioeconomic status areas with high minority representation;
  • advanced aging caused by bodily wear and tear from fight-or-flight responses to external stressors, especially racial discrimination;
  • higher rates of pre-existing behavioral health conditions, such as substance use disorders;
  • lack of digital literacy by providers, patients, families, and caregivers;
  • lack of internet connectivity including broadband, connection speed, and WIFI internet service;
  • presence of food deserts in rural and urban areas;
  • lack of access to reliable, affordable, and safe transportation; and
  • inequitable application of the law and access to affordable legal services.

Agency Comments

We provided HHS, including CDC and CMS, and the Office of Management and Budget (OMB) with a draft of this enclosure. CDC, CMS, and HHS provided technical comments on this enclosure, which we incorporated as appropriate.

GAO’s Methodology

To conduct this work, we reviewed the most recent agency data on indicators of COVID-19 reported by CDC and CMS as of October 20, 2020; reviewed federal laws, agency guidance and documentation; and interviewed or obtained written responses from HHS officials, including those from its Office of Minority Health, Office of the Assistant Secretary for Health, CDC, CMS, HRSA, IHS, and NIH. We assessed the reliability of the datasets used in our analyses by reviewing relevant CDC and CMS documentation and interviewing agency officials. We determined the data were sufficiently reliable for the purposes of our reporting objective.

Contact information: Alyssa M. Hundrup, (202) 512-7114, hundrupa@gao.gov

Related GAO Product

COVID-19 Data Quality and Considerations for Modeling and Analysis. GAO-20-635SP. Washington, D.C.; July 30, 2020.

Behavioral Health

Evidence suggests that effects of the COVID-19 pandemic and related economic crisis—such as increased social isolation, stress, and unemployment—are potentially driving an additional national crisis related to behavioral health. At the same time symptoms of behavioral health conditions—mental health and substance use disorders—are shown to be worsening, access to treatment may be declining due to factors such as treatment providers closing or limiting hours, and loss of employer-based health insurance. Multiple federal agencies are taking actions to help address the impacts of the COVID-19 pandemic on behavioral health.

Entities involved: Department of Health and Human Services, including its Centers for Disease Control and Prevention, Commissioned Corps of the United States Public Health Service, Health Resources and Services Administration, National Institutes of Health, Office of the Assistant Secretary for Preparedness and Response, and Substance Abuse and Mental Health Services Administration; and the Federal Emergency Management Agency, within the Department of Homeland Security

Key Considerations and Future GAO Work

Our work examining the behavioral health impacts of the COVID-19 pandemic is ongoing. We will continue to examine the pandemic’s impacts on Americans’ behavioral health; demand for and access to treatment—particularly among populations especially vulnerable to negative impacts; and the federal response.

Background

Behavioral health conditions—mental health and substance use disorders—affect a substantial number of adults in the United States, and have been of growing concern even before the COVID-19 pandemic.[232] For example, in 2019, an estimated 52 million adults in the United States (21 percent) had “any mental illness”—including 13 million adults (5 percent) with a serious mental illness.[233] Additionally, 20 million people aged 12 or older (or 7 percent of this population) had a substance use disorder—alcohol use disorder, an illicit drug use disorder, or both.

In October 2017, the Acting Secretary of Health and Human Services first declared the opioid crisis a public health emergency and a declaration has been in effect since that time.[234] In March 2020, we determined drug misuse (the use of illicit drugs and the misuse of prescription drugs) was high-risk and reported that we would include this issue in our 2021 High-Risk Series update.[235] We noted then that the COVID-19 pandemic could fuel some of the contributing factors of drug misuse, such as unemployment, highlighting the need to sustain and build upon ongoing federal efforts to address drug misuse.

Various federal agencies regularly conduct behavioral health-related work, including the Substance Abuse and Mental Health Services Administration (SAMHSA), Centers for Disease Control and Prevention (CDC), Health Resources and Services Administration (HRSA), and National Institutes of Health (NIH). Further, in times of disasters or emergencies such as the COVID-19 pandemic, additional federal agencies may take on roles to address behavioral health concerns, including the Office of Assistant Secretary for Preparedness and Response (ASPR), the Commissioned Corps of the U.S. Public Health Service, and the Federal Emergency Management Agency (FEMA).

Under the CARES Act, SAMHSA was appropriated $425 million for health surveillance and program support related to the COVID-19 pandemic.[236] Of this, the Act specified that
  • at least $250 million is available for the Certified Community Behavioral Health Clinic Expansion Grant program,[237]
  • at least $50 million shall be available for suicide prevention programs,
  • at least $100 million is available for noncompetitive grants, contracts, or cooperative agreements to public entities to address emergency substance abuse or mental health needs in local communities, as authorized under section 501(o) of the Public Health Service Act, and
  • at least $15 million shall be allocated to tribes, tribal organizations, urban Indian health organizations, or health or behavioral health service providers to tribes.

Overview of Key Issues

Expected increases in substance use, mental health disorders, and suicidality. As a result of the COVID-19 pandemic, federal officials and stakeholder organizations who address behavioral health issues told us that they expect increases in substance use, mental health disorders, and suicidality, with some noting that the behavioral health consequences resulting from the pandemic are likely to persist after the risk from COVID-19 has decreased. Data collected to date during the pandemic corroborates these concerns. For example, in September 2020, SAMHSA reported increases in opioid overdose deaths in some areas of the country as much as 25 to 50 percent higher during the pandemic than the comparison time period in 2019.[238]

Regarding anxiety and depression, from April through October 2020, the Census Bureau, in collaboration with CDC and other federal agencies, collected information for its Household Pulse Survey on the percentage of U.S. adults reporting symptoms of anxiety disorder and depressive disorder during the COVID-19 pandemic.[239] Results of the Household Pulse survey found that the percentage of adults reporting experiencing these symptoms began at about 36 percent at the start of the survey period (April 23-May 5), generally increased over time to a peak of about 41 percent from July 16-21, and then decreased slightly to about 38 percent at the end of the survey period (October 14-26).[240] In comparison, a CDC survey conducted in 2019 using similar questions found that about 11 percent of U.S. adults reported experiencing these symptoms from January to July 2019.[241]

The results of the Household Pulse Survey also suggest that the percentage of U.S. adults experiencing symptoms differs by age, with more individuals aged 18-29 experiencing symptoms of anxiety disorder or depressive disorder compared to other age groups.[242] With regard to race or ethnicity, a higher percentage of individuals identifying as Hispanic, Black, and other or multiple races reported symptoms of anxiety disorder or depressive disorder compared to White and Asian individuals consistently over the survey period.[243] (See our Health Disparities enclosure.)

In addition, in August 2020, CDC published the results of other surveys conducted during late June 2020 related to mental health, substance use, and suicidal ideation during the COVID-19 pandemic.[244] Overall, about 41 percent of 5,412 respondents who completed surveys during June reported symptoms of at least one adverse behavioral health condition, including about 26 percent of respondents who reported trauma- and stressor-related disorder symptoms related to COVID-19.[245]

Among other survey findings, persons aged 18 to 24 years most commonly reported symptoms of various behavioral health conditions, and prevalence decreased progressively with age. Other subgroups reporting higher prevalence of symptoms of adverse behavioral health conditions included Hispanic respondents, non-Hispanic Black respondents, self-reported unpaid caregivers and essential workers, and those receiving treatment for a previously diagnosed mental health condition.

For example, specific to suicidal ideation, about 11 percent of respondents overall reported having seriously considered suicide in the preceding 30 days, although this response was more prevalent among certain subgroups—as shown in the figure below. In comparison, results from the 2019 National Survey on Drug Use and Health showed that about 5 percent of U.S. adults had thought seriously about suicide in the past year.[246]

Centers for Disease Control and Prevention (CDC) Reported Survey Findings Regarding Suicidal Ideation, June 24–30, 2020

Notes: See M. É. Czeisler, R. I. Lane, E. Petrosky, et al., Mental Health, Substance Use, and Suicidal Ideation During the COVID-19 Pandemic — United States, June 24–30, 2020, MMWR Morbidity and Mortality Weekly Report, vol. 69, no. 32 (2020): p. 1049-1057 (Atlanta, Ga: Centers for Disease Control and Prevention, Aug. 14, 2020). For this study, representative panel surveys were conducted among adults aged ≥18 years across the U.S. during June 24–30, 2020. Quota sampling and survey weighting were used to improve representativeness by gender, age, and race/ethnicity. A total of 5,412 adults completed web-based surveys. The survey instruments included a combination of individual questions, validated questionnaires, and COVID-19 specific questionnaires, which were used to assess respondent attitudes, behaviors, and beliefs related to COVID-19 and its mitigation, as well as the social and behavioral health impacts of the COVID-19 pandemic.

Similarly, while about 13 percent of overall respondents reported having started or increased substance use to cope with stress or emotions related to COVID-19, this response was more common among certain subgroups—(see figure).

Centers for Disease Control and Prevention (CDC) Reported Survey Findings Regarding Substance Use, June 24–30, 2020

Notes: See M. É. Czeisler, R. I. Lane, E. Petrosky, et al., Mental Health, Substance Use, and Suicidal Ideation During the COVID-19 Pandemic — United States, June 24–30, 2020, MMWR Morbidity and Mortality Weekly Report, vol. 69, no. 32 (2020): p. 1049-1057 (Atlanta, Ga: Centers for Disease Control and Prevention, Aug. 14, 2020). For this study, representative panel surveys were conducted among adults aged ≥18 years across the U.S. during June 24–30, 2020. Quota sampling and survey weighting were used to improve representativeness by gender, age, and race/ethnicity. A total of 5,412 adults completed web-based surveys. The survey instruments included a combination of individual questions, validated questionnaires, and COVID-19 specific questionnaires, which were used to assess respondent attitudes, behaviors, and beliefs related to COVID-19 and its mitigation, as well as the social and behavioral health impacts of the COVID-19 pandemic.

Demand for services increasing and access to treatment expected to worsen. Although not all individuals experiencing new or exacerbated behavioral health symptoms will require or seek treatment, there is preliminary data indicating that demand for treatment services is increasing.[247] For example, data provided by SAMHSA indicate that call and text volume to its Disaster Distress Helpline increased considerably during the pandemic as compared to 2019.[248]

Specifically, between March and August 2020, call volume peaked at 9,965 calls in April 2020—an 890 percent increase over April 2019, and then tapered off in the following months to 3,778 calls in August 2020 (a 340 percent increase). Text volume increased by even greater percentages, also peaking in April 2020. Call volume to SAMHSA’s National Helpline—a mental health and substance use treatment referral and information service—also increased during the pandemic. SAMHSA data show that call volume to this helpline began increasing over 2019 volume beginning in May 2020 (from 54,203 to 64,177 calls, or an 18 percent increase), and peaked in August 2020 (at 80,348 calls or a 35 percent increase).

Moreover, an August 2020 survey by the National Council for Behavioral Health found that 52 percent of the 343 provider member organizations surveyed reported demand for their services increasing in the 3 months before the survey.[249]

At the same time as demand increases, access to behavioral health treatment services is expected to worsen as a result of the COVID-19 pandemic. SAMHSA cites contributing factors such as layoffs of behavioral health staff and the loss of providers without the financial reserves to survive long-term and those unable to generate sufficient revenue to continue to operate.[250] According to the August 2020 survey of the National Council for Behavioral Health provider member organizations, as a result of the COVID-19 pandemic:
  • 26 percent of organizations reported laying off employees,
  • 24 percent furloughed employees,
  • 43 percent decreased the hours for staff, and
  • 65 percent of organizations reported having to cancel, reschedule, or turn away patients in the last 3 months.

SAMHSA officials and several stakeholder organizations cited additional factors that might limit access to care, such as loss of employer-based health insurance, and lack of broadband access or access to telehealth-capable devices as providers switched to telehealth-based treatment during the pandemic.

As we previously reported in June 2015, concerns about the availability of behavioral health treatment, particularly for low-income individuals, have been longstanding. For instance, before the COVID-19 pandemic, HRSA reported that by 2025 shortages of seven selected types of behavioral health providers were expected, with shortages of some provider types expected to exceed 10,000 full-time equivalents.[251] As of September 30, 2020, HRSA designated more than 5,700 mental health provider shortage areas, affecting more than 119 million Americans. In these areas, about 27 percent of the estimated need for behavioral health providers is met.[252]

Federal agencies are taking actions to help address behavioral health impacts. Multiple federal agencies are taking actions to help address impacts of the COVID-19 pandemic on behavioral health, including the following:

SAMHSA. SAMHSA established a website, https://www.samhsa.gov/coronavirus, on which it has posted guidance and other documents related to providing behavioral health treatment services during the pandemic. For example, SAMHSA and the Centers for Medicare & Medicaid Services issued guidance encouraging health insurance issuers to expand coverage for mental health and substance use disorder services delivered via telehealth, among other things. [253] SAMHSA also released guidance related to other topics, such as considerations for outpatient mental and substance use disorder treatment settings, and state psychiatric hospitals during the COVID-19 pandemic.

In partnership with the Drug Enforcement Administration, SAMHSA announced flexibilities related to the provision of methadone and buprenorphine for the treatment of opioid use disorder in response to the COVID-19 pandemic. For example:
  • For new patients treated with buprenorphine, SAMHSA is exempting opioid treatment programs (OTPs) from the requirement to perform an in-person physical evaluation, allowing for the evaluation of the patient to be accomplished via telehealth.[254]
  • For existing OTP patients, SAMHSA released guidance allowing for practitioners in OTPs to continue treatment with methadone and buprenorphine via telehealth, as long as certain conditions are met.[255]

A SAMHSA official told us that SAMHSA is also undertaking other efforts related to behavioral health and the COVID-19 pandemic, including offering training and technical assistance to behavioral health providers and educators, and focusing on public awareness messaging with entities such as school systems and local news organizations.

From its CARES Act funding, in July 2020, SAMHSA announced grant awards totaling over $424 million. This funding went to support various behavioral health related service providers, including Certified Community Behavioral Health Clinics, tribal behavioral health programs, states and territories, and local- and state-funded crisis centers, according to SAMHSA (see table). A SAMHSA official told us that the demand for these awards exceeded available funds, and that SAMHSA was not able to fund all applicants.
Substance Abuse and Mental Health Services Administration (SAMHSA) COVID-19 Related Grants

Grant

Amount awarded ($)

Certified Community Behavioral Health Clinics expansion grantsa

249,657,910

Emergency grants to address mental and substance use disorders during COVID-19b

109,791,641

Tribal Behavioral Health program supplemental fundingc

14,999,908

Suicide Prevention Lifeline Crisis Center follow-up expansion grantsd

2,978,828

Suicide Lifeline/Disaster Distress Helpline supplemental fundinge

7,021,172

COVID-19 emergency response for suicide prevention grantsf

39,795,212

Total

424,244,671
Source: GAO summary of SAMHSA data. | GAO-21-191

Notes: Grants noted were awarded through July 20, 2020.
aSAMHSA reports that the purpose of the Certified Community Behavioral Health Clinics (CCBHC) expansion grants is to increase access to and improve the quality of community mental and substance use disorder treatment services through CCBHC expansion, and that it awarded expansion grants to 64 CCBHCs.
bSAMHSA reports that the purpose of this emergency grant program is to provide crisis intervention services, mental and substance use disorder treatment, and other related recovery supports for children and adults affected by the COVID-19 pandemic. Funding was available to states, territories, and tribes, and 96 awards were made.
cSAMHSA reports that the purpose of the Tribal Behavioral Health program is to prevent suicide and substance misuse, to reduce the impact of trauma, and to promote mental health among American Indian/Alaska Native (AI/AN) youths up to 24 years old. SAMHSA provided supplemental funding to 154 current tribal behavioral health grant recipients in the amount of $97,402 each.
dThe National Suicide Prevention Lifeline (NSPL) is a network of over 170 local- and state-funded crisis centers located across the United States. Eligibility for these grants was limited to NSPL Crisis Centers, and 3 awards were made.
eSAMHSA reports that the purpose of this supplemental funding was to support the Lifeline’s use of text messaging and expand access to the Lifeline services across the nation in response to the COVID-19 pandemic. This funding was provided to the organization which runs the NSPL and Disaster Distress Hotline.
fSAMHSA reports that the purpose of this grant program is to support states and communities during the COVID-19 pandemic in advancing efforts to prevent suicide and suicide attempts among adults age 25 and older. Funding was available to states, territories, tribes and tribal organizations, community-based primary care or behavioral healthcare organizations, community-based service providers able to meet psychiatric and psychosocial needs of clients, public health agencies, and emergency departments. Fifty awards were made.

CDC. In addition to CDC’s partnership with the Census Bureau on the Household Pulse Survey and publication of the June survey related to mental health, substance use, and suicidal ideation during the COVID-19 pandemic, CDC reported that it modified some of its existing, ongoing data collection efforts on behavioral health in response to the COVID-19 pandemic. For example, starting in July 2020, CDC added questions to identify those diagnosed with COVID-19 to its annual National Health Interview Survey so the agency can examine the mental health of those individuals.[256] According to CDC officials, the agency has also been involved in disseminating resources to the public to respond to behavioral health impacts of COVID-19. For example, the CDC Foundation provided support for the interactive website How Right Now, which provides tools to help individuals experiencing feelings of grief, loss, or worry during COVID-19 identify resources to help meet their needs.[257]

HRSA. HRSA indicated that one of its primary actions during the COVID-19 pandemic related to behavioral health has been to support its grantees in their efforts to continue providing or expanding access to behavioral health services.[258] For example, HRSA reported that it has awarded more than $2 billion in supplemental funding to support health centers in responding to COVID-19, including maintaining or increasing health center capacity to support the continued delivery of primary care services, including substance use disorder and mental health services.

HRSA also reported that in response to the pandemic, the agency has focused on increasing access to telehealth for mental health and substance use services. For example, HRSA noted that it has awarded $15 million in CARES Act funding to increase telehealth access and infrastructure to support four areas of maternal and child health—one of which is services and supports for delivering trauma-informed health care, including behavioral health care. Additionally, HRSA’s behavioral health training programs incorporated telehealth and distance learning models in their education, training, and practice programs.

Further, HRSA administers the Provider Relief Fund, which reimburses eligible providers for health care-related expenses or lost revenues attributable to COVID-19.[259] Behavioral health providers may have been eligible to receive some of the Provider Relief Fund disbursements to date, if, for example, they participate in Medicare or Medicaid. Additionally, on October 1, 2020, the Department of Health and Human Services, through HRSA, announced a new allocation of $20 billion from the Provider Relief Fund, noting that an expanded group of behavioral health providers will be eligible for these relief payments, such as addiction counseling centers, mental health counselors, and psychiatrists. (See the Relief for Health Care Providers enclosure for more information on Provider Relief Fund allocations and disbursements.)

NIH. NIH officials reported that the agency has made changes to its behavioral health research plans based on the COVID-19 pandemic.[260] The agency reported in its July 2020 Strategic Plan for COVID-19 Research that it planned to support research to understand and address the impacts of COVID-19 on behavioral health including potential impacts of the public health measures used to prevent the spread of the virus which may affect behavioral health.[261] NIH reported that the agency had made numerous COVID-19 specific awards related to behavioral health research.[262] For example, the National Institute on Drug Abuse issued a notice in March 2020 to solicit research on risks and outcomes for COVID-19 in individuals with substance use disorders. As a result, in fiscal year 2020, NIH funded 70 awards under this notice, many directly focused on behavioral health.[263]

Additionally, NIH officials told us that various NIH institutes and offices have coordinated research efforts through an NIH-wide workgroup intended to examine a broad range of topics. These include the social and economic impacts of various efforts to mitigate the pandemic; the effects of these impacts on mental health, suicide, substance use, violence, and other disorders; and the effects of the pandemic and its mitigation on health care access.[264] As of September 2020, this workgroup had issued two funding opportunities focused on interventions to reduce the impact of the pandemic on vulnerable populations, such as those with health disparities.

NIH is also internally conducting research related to the behavioral health impacts of the COVID-19 pandemic. For example, the National Institute of Mental Health began studying the mental health impact of the COVID-19 pandemic in April 2020 to learn how stressors related to the COVID-19 pandemic affect mental health over time.

ASPR. ASPR reported in October 2020 that it had deployed 20 National Disaster Medical System mental health specialists and one psychologist, both in-person and virtually, to help address behavioral health needs related to the COVID-19 pandemic.[265] For example, ASPR reports that National Disaster Medical System teams providing medical support for state and local facilities in relation to COVID-19 usually include a mental health specialist to provide responders with support and guidance on managing extreme stress.

ASPR also reported that it was engaged in ongoing activities with other federal departments related to behavioral health and COVID-19. For example, an ASPR official chairs a behavioral health work group that also includes SAMHSA, CDC, and nonfederal participants. ASPR reports that the group aims to support mental health and substance use disorder treatment systems through efforts such as promoting promising practices and strategies for system sustainability.

Commissioned Corps. The Commissioned Corps of the United States Public Health Service reported that as of September 15, 2020, it had deployed 165 behavioral health officers in support of the COVID-19 pandemic response. These behavioral health support missions included activities such as providing behavioral health support for:
  • quarantined residents on Air Force bases,
  • residents of long-term care facilities, and
  • patients in Indian Health Service facilities.

FEMA. As of October 15, 2020, FEMA reports that it has awarded more than $302 million to 48 states and territories through its Crisis Counseling Assistance and Training program, which assists individuals and communities in recovering from the psychological effects of natural and human caused disasters through community-based outreach and educational services.[266] Some states have reported that they are using this funding, for example, to fund local hotlines, and deploy outreach counselors and clinicians to provide basic education and counseling around issues related to the pandemic, and assess high-risk individuals for mental health referrals.

In addition to the actions taken by the federal agencies listed above, on October 3, 2020 the President signed an Executive Order, which, among other things, established a Coronavirus Mental Health Working Group to be co-chaired by the Secretary of Health and Human Services and the Assistant to the President for Domestic Policy (or their designees). According to the Executive Order, the working group will include representatives from numerous federal agencies, as well as the Office of National Drug Control Policy and the Office of Management and Budget. It directs the working group to examine existing protocols and evidence-based programs that may serve as models to better support mental and behavioral health conditions of vulnerable populations, and to submit a plan to the President within 45 days of the date of the order for improved service coordination between all relevant stakeholders and agencies to assist individuals in crisis.[267]

Agency Comments

We provided a draft of this enclosure to the Department of Health and Human Services, the Department of Homeland Security, and the Office of Management and Budget. The Department of Health and Human Services provided technical comments, which we incorporated as appropriate. Neither the Department of Homeland Security nor the Office of Management and Budget provided comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed federal law, agency guidance and documents; and interviewed or obtained written responses from agency officials, including those from SAMHSA, CDC, HRSA, NIH, ASPR, and FEMA. We reviewed data from Phase 1 and 2 of the Household Pulse Survey through October 26, 2020, as reported by CDC’s National Center for Health Statistics, and SAMHSA’s Disaster Distress Helpline and National Helpline data provided for January through August 2019 and January through August 2020. We assessed the reliability of these data, and the June survey data published in CDC’s Morbidity and Mortality Weekly Report, by reviewing relevant agency documentation, requesting written information from agency officials, and checking for obvious errors. We determined that these data were sufficiently reliable for the purpose of describing reported impacts of the COVID-19 pandemic on behavioral health symptoms and demand for treatment.

We also conducted interviews, and reviewed written responses and other reports and documentation provided by organizations that represent various types of behavioral health service providers, referred to as stakeholders, to obtain their perspectives on behavioral health concerns, challenges, and federal agency actions.[268] We reviewed the findings from the National Council for Behavioral Health’s August 2020 member survey, and assessed the reliability of these data by requesting information from the Council, and reviewing survey documentation. We determined that these data were sufficiently reliable for the purpose of describing reported impacts of the COVID-19 pandemic on behavioral health treatment providers. In addition to federal agency and stakeholders’ reports and documentation, we also reviewed other published reports and research papers related to behavioral health and the COVID-19 pandemic.

Contact information: Alyssa M. Hundrup, (202) 512-7114, hundrupa@gao.gov

Related GAO Products

Drug Misuse: Sustained National Efforts Are Necessary for Prevention, Response, and Recovery. GAO-20-474. Washington, D.C.: March 26, 2020.

Behavioral Health: Options for Low-Income Adults to Receive Treatment in Selected States. GAO-15-449. Washington, D.C.: June 19, 2015.

States’ Perspectives on Medical Supply Availability

States and territories in our nationwide survey continue to report limitations in the availability of certain medical supplies, such as nitrile gloves and reagents used for COVID-19 testing.

Entities involved: The Federal Emergency Management Agency, within the Department of Homeland Security; and the Department of Health and Human Services, including its Office of the Assistant Secretary for Health and Office of the Assistant Secretary for Preparedness and Response.

Key Considerations and Future GAO Work

In September 2020, we reported ongoing constraints with the availability of certain types of personal protective equipment (PPE) and testing supplies due to a supply chain with limited domestic production and high global demand. Specifically, we found that the Food and Drug Administration (FDA) and Federal Emergency Management Agency (FEMA) had both identified shortages of certain supplies. Officials from seven of the eight states, as well as stakeholder groups GAO interviewed in July and August 2020, identified constraints around PPE and testing supplies. We also found that states and other nonfederal entities have experienced challenges tracking supply requests made through the federal government and budgeting for ongoing needs.

To address these issues, we recommended that the Department of Health and Human Services (HHS)—the lead agency in charge of the federal public health response to the pandemic—in coordination with FEMA:
  • further develop and communicate to stakeholders plans outlining specific actions the federal government will take to help mitigate supply chain shortages for the remainder of the pandemic.
  • immediately document roles and responsibilities for supply chain management functions transitioning to HHS, including continued support from other federal partners, to ensure sufficient resources exist to sustain and make the necessary progress in stabilizing the supply chain.
  • devise interim solutions, such as systems and guidance and dissemination of best practices, to help states enhance their ability to track the status of supply requests and plan for supply needs for the remainder of the COVID-19 pandemic response.

HHS and the Department of Homeland Security (DHS) disagreed with these recommendations, noting, among other things, the work that they had done to manage the medical supply chain and increase supply availability.

We recognize the efforts of federal agencies in improving the supply chain. However, in light of reported shortages, and our October 2020 nationwide survey of state and territorial public health and emergency management officials described below, we underscore the critical imperative that HHS and FEMA implement our September 2020 recommendations. Taking these actions could help address the ongoing medical supply chain challenges identified in our survey and related work.

We will continue to monitor the implementation of our recommendations and continue our work reviewing the medical supply chain, to include pharmaceuticals, supplies for testing, and the management of the Strategic National Stockpile.

Background

Medical supplies are crucial to preventing, detecting, and treating COVID-19, and will be needed to administer a COVID-19 vaccine when available.

PPE and testing supplies. Typically, the commercial medical supply chain supports the needs of health care providers (such as hospitals and nursing homes), and laboratories—which can be hospital-based, private, public health, or commercial.

However, the demands of the global COVID-19 pandemic overwhelmed the medical supply chain, causing constraints in the availability of PPE supplies like N95 respirator masks, surgical gowns, and gloves; as well as of supplies needed to test patients for COVID-19. (See figures below.) These testing supplies include nasal swabs used to collect viral specimens from patients, transport media that keep samples viable for testing, reagents used to process tests, testing instruments, and rapid point-of-care tests. As a result, health care providers and laboratories have had challenges in obtaining timely and complete access to needed supplies through the commercial market.

Examples of Personal Protective Equipment

Examples of COVID-19 Testing Supplies

The federal government and the states have taken multiple actions to help ensure supplies are available where they are needed. For example,
  • According to FEMA officials, if a local entity, such as a nursing home or hospital, has issues acquiring PPE on the commercial market, it can turn to the state, tribe, or territory, which may be able to provide assistance. However, if a state is unable to meet local PPE needs through the purchase of materials from the commercial market or other state-initiated efforts (e.g., donations), it can make a resource request to the federal government.
  • HHS distributes monthly allocations of certain testing supplies (nasal swabs and transport media) to states based, in part, on each state’s testing plan, utilization of supplies from the prior month, epidemiological indicators, and logistical considerations.[269]
  • The federal government has, at times, distributed supplies directly to health care providers. For example, FEMA and HHS’s Office of the Assistant Secretary for Health coordinated the delivery directly to each Medicare- and Medicaid-certified nursing home of a 14-day supply of gloves, surgical masks, gowns, and eye protection from May through August 2020. They later distributed point-of-care testing devices and kits to all nursing homes.

Vaccine administration supplies. The quantity of supplies needed to administer the COVID-19 vaccine to the U.S. population is so large that the federal government has contracted for the production and assembly of vaccine-related supplies into kits that will be distributed along with the vaccine. In its September 2020 COVID-19 Vaccination Program Interim Playbook for Jurisdiction Operations, the Centers for Disease Control and Prevention stated that ancillary supply kits would be distributed along with vaccines that contain needles, syringes, alcohol prep pads, surgical masks, face shields, and vaccination cards.[270] The Interim Playbook also noted that these kits will not include other supplies such as sharps containers, gloves, and bandages. In an October 19, 2020, letter to the President, the National Governors’ Association relayed states’ concerns about how the federal government would manage the supply chain for vaccine administration supplies such as needles, syringes, alcohol pads, and bandages.

Overview of Key Issues

Our survey results indicate states and territories—hereafter, states—have experienced challenges in procuring adequate quantities of supplies to meet the needs of local entities within their states and at testing sites.[271] The majority of the 47 states that responded to our survey reported that they received and were able to fulfill requests for certain PPE, while other supplies remained constrained. States also expressed concerns about having adequate supplies to administer a future COVID-19 vaccine, and they noted some challenges in tracking and budgeting associated with supplies received from the federal government.[272]

States are fulfilling PPE requests, but supplies of some PPE remain constrained. The majority of states that responded to our survey received requests for supplies from organizations and entities within their states and were mainly able to fulfill them. However, availability constraints continue with certain PPE, such as nitrile gloves.

Almost all (46 of 47) responding states reported that they had received requests for at least one type of PPE from organizations or entities within their states in the 30 days preceding the survey. The presence of these requests indicates that these organizations remain challenged in their ability to procure adequate quantities of supplies to meet their needs. The most commonly requested supplies were surgical masks (46 states), followed by N95 respirators, nitrile gloves, and face shields and goggles (45 states received requests for each of these supplies).

We found that while many states are receiving requests for PPE, they are able to fulfill those requests, with a few exceptions. For example, 38 states responded that they were able to fulfill requests greatly or completely for non-surgical masks in the previous 30 days. (See figure below.) In contrast, less than half (22 states) responded that they were greatly or completely able to fulfill requests for nitrile gloves, and 11 states reported slightly or not at all fulfilling those requests. In open-ended responses, one of the reasons given for the lack of complete fulfillment was a lack of availability of certain sizes of nitrile gloves—two states noted an inability to obtain extra-large nitrile gloves, for example.

Extent that States and Territories Fulfilled Requests for Selected Personal Protective Equipment (PPE)

Note: The results are based on our survey sent to senior officials in the public health and/or emergency management departments of all 50 states; Washington, D.C., and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands), fielded from October 10 through October 21, 2020. We received responses from 47 of the 56 locations, representing 41 states, Washington, D.C., and all five territories. Not all states responded to each survey question. For this survey question, we asked states to what extent they were able to fulfill requests received for selected PPE types in the 30 days prior to the survey. At least 44 states responded for all PPE types listed above except for surgical gowns (42) and boot covers (31).

A majority of states reported that they had a 30-day stockpile of six of the seven PPE types in our survey, consistent with what we reported in September 2020. (See figure below.) In addition, in their open-ended responses, more than one-third of the states indicated that they had 30-day stockpiles of additional PPE items; two commonly stockpiled items were coveralls (full-body suits) and bouffant caps (hair coverings).

Number of States Reporting 30-day Stockpiles of Selected Personal Protective Equipment (PPE)

Note: We sent a survey to senior officials in the public health and/or emergency management departments of all 50 states; Washington, D.C.; and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands), fielded from October 10 through October 21, 2020. We received responses from 47 of the 56 locations, representing 41 states, Washington, D.C., and all five territories. Not all states responded to each survey question. For this survey question, we asked states whether they had at least a 30-day supply on hand (stockpiled) of selected PPE. All 47 states responded to this question; the table represents only those states that responded “yes” for each PPE type (other response options were no, unsure, or not applicable). States responding that stockpiling was not applicable were as follows: one state each for surgical masks and surgical gowns; two states for non-surgical masks; and 10 states for boot covers.

More than half the states reported having obtained supplies from either the commercial market or FEMA in the past 30 days, indicating that states could not completely fulfill requests from supplies they had on hand.
  • Almost all states (44) reported having obtained PPE from the commercial market. Of those 44 states, 17 reported that they were able to greatly or completely obtain supplies to meet their states’ needs; 22 states responded that they were moderately able to do so.
  • Almost three-quarters of states (34) reported having obtained PPE from FEMA, which indicates challenges in procuring these supplies from the commercial market, as states would only request supplies from FEMA when they were unable to meet their needs through the commercial market. Of those 34 states, 12 reported that they were greatly or completely able to obtain supplies from FEMA to meet their states’ needs; 8 states reported slightly or not at all being able to obtain needed supplies. In an open-ended response, one state noted that supplies received from FEMA in the past 30 days were ordered 6 months prior.

The extent to which states expressed confidence in their ability to fulfill PPE requests they may receive over the 60 days following the survey varied among states and by PPE type. (See figure below.) For example, 32 states were greatly or completely confident in their ability to fulfill future requests for face shields and goggles. In contrast, about one-third (17) of states were greatly or completely confident in their ability to fulfill future requests for nitrile gloves; 15 states responded that they were only slightly confident or not at all confident in their ability to fulfill future requests for nitrile gloves.

Extent of States’ Confidence in Ability to Fulfill Future Requests for Selected Personal Protective Equipment (PPE)

Note: We sent a survey to senior officials in the public health and/or emergency management departments of all 50 states; Washington, D.C.; and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands), fielded from October 10 through October 21, 2020. We received responses from 47 of the 56 locations, representing 41 states, Washington, D.C., and all five territories. Not all states responded to each survey question. For this survey question, we asked states the extent to which they were confident in their ability to fulfill requests for selected PPE items in the 60 days following the survey. All 47 states responded for all PPE types listed above except for non-surgical masks (46) and boot covers (45).

Shortages reported for three of five types of testing supplies. In our survey, we asked whether states’ testing sites or laboratories had experienced shortages of five selected testing supplies in the previous 30 days. Most states reported no shortages of swabs or transport media, but one-third to one-half of the 47 states reported shortages in the other three types of testing supplies: reagents (21 states), testing instruments (16 states), and rapid point-of-care tests (24 states). (See figure below.)

State-Reported Supply Shortages for Testing Sites or Laboratories

Note: We sent a survey to senior officials in the public health and/or emergency management departments of all 50 states; Washington, D.C.; and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands); fielded from October 10 through October 21, 2020. We received responses from 47 of the 56 locations, representing 41 states; Washington, D.C.; and all five territories. Not all states responded to each survey question. For this survey question, we asked states whether testing sites or laboratories had experienced shortages of selected testing supplies in the 30 days preceding the survey. Forty-six states responded for all testing supply types listed above.

When asked about testing supply availability at testing sites and laboratories for the 60 days following the survey, half the states (22) expected there would be shortages in rapid point-of-care tests, and 20 states expected there would be shortages in reagents. (See figure below.) This is also consistent with our September 2020 report, where we reported that officials in several states we interviewed identified difficulties in acquiring reagents and test kits from the commercial market. In contrast, more than half the states reported that they did not expect to experience shortages in swabs (29 states) or transport media (28 states). (See our related COVID-19 Testing Guidance enclosure.)

States’ Anticipated Supply Shortages for Testing Sites or Laboratories

Note: We sent a survey to senior officials in the public health and/or emergency management departments of all 50 states; Washington, D.C.; and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands); fielded from October 10 through October 21, 2020. We received responses from 47 of the 56 locations, representing 41 states; Washington, D.C.; and all five territories. Not all states responded to each survey question. For this survey question, we asked states whether they anticipated that testing sites or laboratories would experience shortages of selected testing supplies in the 60 days following the survey. Forty-six states responded for all testing supply types listed above except for transport media (45).

Planning for future COVID-19 vaccine supply needs. States responding to our survey expressed concerns about having adequate supplies to distribute and administer a future COVID-19 vaccine. In our survey:
  • About one-third of the states (17 of 47) responded that they were greatly or completely concerned about having sufficient vaccine-related supplies to administer COVID-19 vaccines in their state or territory. An additional 21 states were moderately concerned.
  • In their open-ended responses, senior officials from six states stated they were specifically concerned about the federal government’s ability to supply needles given reports of shortages; three of those states also reported challenges maintaining supplies of needles for their state’s flu vaccination efforts.

Working with the federal government to meet supply needs. We reported in September 2020 that state and other nonfederal partners experienced three types of challenges in working with the federal government to meet supply needs: (1) knowing which federal supplies would arrive and when; (2) confirming the right entities received correct and usable supplies when federal programs delivered them directly to local organizations or entities; and (3) determining how to plan and budget for future supply needs, in part due to uncertainty about which programs provided which supplies.

Our survey results indicate that while most states did not report challenges in knowing which supplies would arrive and when, many states reported experiencing other types of challenges.
  • Most states (41 of 47) responded that they had a slight or no challenge in knowing which supplies would arrive and when.
  • A majority of states (26) reported experiencing a moderate to great challenge in tracking supplies that were delivered directly to local points of care.
  • About half the states (23) responded that budgeting for future supply needs was greatly or completely challenging, and an additional 17 reported a moderate challenge.
  • One-quarter of the states (12) responded that it was either a great or complete challenge to gain clarity on the state’s share of the cost for supplies already requested and delivered; an additional 15 states reported this was a moderate challenge.

Agency Comments

We provided HHS, DHS, and the Office of Management and Budget (OMB) with a draft of this enclosure. HHS, in its comments, repeated its disagreement with our September 2020 recommendations and noted its efforts to meet the needs of states. Our report acknowledges those efforts, but we continue to maintain that our recommendations are warranted.

In its comments, HHS incorrectly stated that our survey results showed that few states had experienced or anticipated shortages in medical or testing supplies. Rather, our survey results show that fewer than half the states (22 of the 45 that received requests) reported being able to completely fulfill supply requests for nitrile gloves. Similarly, 21 states reported shortages in the availability of reagents needed to process COVID-19 tests in the 30 days preceding our survey. About one-third of the states also remained concerned about having adequate supplies available to administer a COVID-19 vaccine.

HHS also reiterated its request for the names of states with reported shortages and identifying information for senior state officials with whom we spoke. As we stated in our September report, our findings and recommendations are not that HHS should follow up to adjudicate individual issues that have already occurred. Rather, our findings from our nationwide survey of state public health and emergency management offices could help inform the department’s supply efforts moving forward by providing a snapshot of states’ needs and concerns. Further, the intent of the recommendations is that HHS and FEMA, as leads for this pandemic response, seek to better understand the problems we continue to identify and devise solutions to help ensure the federal government can mitigate remaining medical supply gaps and assist states, tribes, and territories in serving their citizens effectively.

DHS provided technical comments, which we incorporated as appropriate. OMB did not provide comments on this enclosure.

GAO’s Methodology

To conduct this work, we designed and fielded a survey to senior state and territorial public health and/or emergency management officials in the 50 states; Washington, D.C.; and the U.S. territories (American Samoa, Guam, Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands). We asked senior state officials to respond to each question from the perspective of their state or territory as a whole; however, we did not independently verify whether senior officials sought input from other state offices when completing the survey. The survey contained questions designed to obtain senior state officials’ perspectives on the availability of PPE, testing, and vaccine administration supplies. We asked about supply availability within the 30 days preceding the survey, as well as projected availability over the 60 days following the survey. The survey also contained questions designed to obtain senior state officials’ perspectives on working with the federal government to meet supply needs.

We fielded this survey from October 10, 2020 through October 21, 2020. We pretested a draft of the survey with state officials in two states—a public health official in one state and an emergency management official in another—to help ensure that the questions were understandable and answerable. We received survey responses from 41 states, Washington, D.C., and all five territories—47 responses total.[273] We assessed data reliability by checking for missing values and survey response errors. We followed up with state officials on survey responses as appropriate. After completing these checks, we determined that the final survey data were sufficiently reliable for the purpose of obtaining states’ perspectives on medical supply availability.

Contact information: Mary Denigan-Macauley, 202-512-7114; DeniganMacauleyM@gao.gov

COVID-19 Cyber Response

The Department of Health and Human Services has increased collaboration and coordination to respond to cyber threats that attempted to exploit COVID-19 to target health care organizations. In addition, the department has made progress in implementing our prior recommendations regarding cybersecurity weaknesses at its component agencies. However, several recommendations remain unimplemented.

Entities involved: Department of Health and Human Services; Cybersecurity and Infrastructure Security Agency, within the Department of Homeland Security; and Federal Bureau of Investigation, within the Department of Justice

Key Considerations and Future GAO Work

We are currently reviewing the Department of Health and Human Services’ (HHS) roles and responsibilities for assisting with cybersecurity in the health care and public health critical infrastructure sector. This review includes an evaluation of the department’s efforts to collaborate and coordinate as part of its response to COVID-19-related cyberattacks. In addition, we are monitoring the department’s efforts to expedite implementation of our prior cybersecurity-related recommendations at its component agencies. Since we last reported in September 2020, the component agencies—Centers for Medicare & Medicaid Services, Food and Drug Administration (FDA), and Centers for Disease Control and Prevention—implemented an additional 54 cybersecurity recommendations. This brings the total number of implemented recommendations to 404 of 434, which reflects a 12 percent increase of corrective actions taken to bolster cybersecurity at the component agencies.[274]

Background

National emergencies, such as the current COVID-19 public health emergency, call for coordinated efforts to strengthen and maintain secure, functioning, and resilient critical infrastructure, as is set out in Presidential Policy Directive 21.[275] In this regard, the directive requires sector-specific agencies to work with critical infrastructure owners and operators and other sector partners to manage risk and strengthen the security and resilience of the nation's critical infrastructure.[276] According to the directive, these efforts should consider all hazards, including cybersecurity threats, and are intended to identify and disrupt threats and hasten response and recovery, among other things. Presidential Policy Directive 21 designated HHS as the sector-specific agency for health care and public health. In this role, HHS is responsible for collaborating with sector partners and coordinating activities to strengthen cybersecurity in the sector.

Overview of Key Issues

Given the increase in cyberattacks against health care organizations since March 2020, HHS increased its collaboration efforts and coordination with other federal agencies to respond to cyber threats that attempted to leverage the COVID-19 pandemic to target those organizations.[277] The department leads, or co-leads, several collaborative efforts intended to strengthen cybersecurity in the health care and public health sector. Since March 2020, the department increased collaborative efforts to address cybersecurity concerns associated with COVID-19, as described in the table below.
Department of Health and Human Services’ (HHS) Collaborative Efforts to Respond to Increased Cyberattacks Associated with COVID-19 since March 2020

HHS-led collaborative group

Description

Collaborative effort

HHS Chief Information Security Officer Council

A collaborative effort led by the HHS Chief Information Security Officer that facilitates the sharing of information among the chief information security officers across the department.

During the council’s April and May 2020 meetings, participants received a demonstration of the HHS Protect system;a information on the Department of Homeland Security’s cybersecurity support (i.e., staffing and funding) to the department in light of COVID-19; and notification of the release of best practices for using Zoomb and video conferencing.

HHS Cybersecurity Working Group

A forum of HHS staff divisions and component agencies led by the Office of the Assistant Secretary for Preparedness and Response (ASPR) that facilitates discussions and coordination of cybersecurity issues in the health care sector.

The working group has met monthly—with the exception of May 2020—to discuss and coordinate efforts focused on health care sector cybersecurity. For example, during the April 2020 meeting, the Food and Drug Administration (FDA) provided updates on its efforts to engage with the sector’s industry partners for medical device security.

Government Coordinating Council’s Cybersecurity Working Group

An ASPR-led group of federal, state, local, tribal, and territorial health care partners. It coordinates to enhance critical infrastructure resiliency and to reduce cyber risks across the public landscape of the health care sector.

The working group collaborated to establish a Telehealth Task Group to address cybersecurity risks to the telehealth industry. The task group, which was formally established on August 26, 2020, has met biweekly to discuss ongoing telehealth-related activities, such as those led by HHS’s component agencies.

Joint Healthcare and Public Health Sector Cyber Working Group

The working group is co-led by ASPR, the HHS Office of the Chief Information Officer, and FDA, along with industry partners. It is a forum of government and industry partners that facilitates discussion of issues and development of resources to enhance cybersecurity among health care sector stakeholders.

The working group has collaborated to discuss establishment of the Telehealth Task Group described above. The working group also collaborated to develop and distribute guidance on managing cybersecurity risks while teleworking.

Healthcare Threat Operations Center

A collaborative effort between the federal health care partners—HHS, the Department of Veterans Affairs, and the Defense Health Agency—that is intended to improve the computer security and incident response capabilities of those agencies.

The federal health care partners have shared cybersecurity threat information among each other through the ThreatConnect secure portal.c For example, HHS shared information regarding a phishing campaign that attempted to trick users into thinking that HHS had sent them a legitimate email requesting face masks and forehead thermometers that were listed in a malicious email attachment.
Source: GAO analysis of HHS documentation. | GAO-21-191

aHHS Protect is intended to serve as a secure data ecosystem for collecting, sharing, and analyzing near-real-time COVID-19 data.
bAccording to its website, Zoom is a cloud platform for video and voice conferencing, content sharing, and chatting that works across several devices, including mobile devices, desktop computers, and telephones.
cThreatConnect is a secure portal that allows users to share information related to cyber alerts, cyber warnings, and cyber threat intelligence.

In addition to the increased collaboration efforts, HHS expanded cybersecurity coordination with the Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) and the Federal Bureau of Investigation (FBI) to address cyber threats associated with COVID-19, as described below.
  • According to officials in the HHS Office of the Chief Information Officer (OCIO) and the Office of the Assistant Secretary for Preparedness and Response (ASPR), ASPR coordinated meetings with CISA and FBI to identify and notify critical organizations and organizations with critical assets that need extra protection during the nation’s response to COVID-19. The HHS officials informed us that these efforts began in March 2020 and are still ongoing.
  • Between March and July 2020, HHS’s Health Sector Cybersecurity Coordination Center (HC3) routinely provided information on cybersecurity threats, vulnerabilities, and incidents to CISA.[278] According to officials at CISA, the agency disseminated the information provided by HC3 more broadly to federal, state, and local partners; private industries; critical infrastructure partners; and international partners through various information-sharing platforms.
  • ASPR, HC3, CISA, and FBI meet weekly as part of the Cyber Watch Project, which is intended to execute and coordinate government-wide cyber engagements in support of health care sector entities that are developing and testing COVID-19 therapeutics and vaccines. They jointly develop and prioritize a list of sector entities involved in developing therapeutics and vaccinations. After the prioritized list is developed, they offer cybersecurity support through engagements intended to ensure that the identified entities are not impacted or interrupted by cyber threats. According to HHS OCIO and ASPR officials, these efforts began in March 2020 and are still ongoing.
  • Between April and July 2020, ASPR held joint weekly webinars with DHS and the InfraGard National Capital Region that focused on physical security and cybersecurity during COVID-19.[279]

Agency Comments

We provided HHS and the Office of Management and Budget (OMB) a draft of this enclosure for review and comment. HHS and OMB did not provide any comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed the most recent charters and concept of operations describing the collaborative groups led by HHS to strengthen cybersecurity in the health care and public health critical infrastructure sector. We also obtained documentation demonstrating recent efforts of those groups to collaborate and coordinate with other entities on cybersecurity issues related to COVID-19. In addition, we interviewed officials from HHS OCIO, ASPR, and CISA to obtain information and documentation on their efforts to collaborate and coordinate in response to the increased cyberattacks associated with COVID-19. To update the status of the recommendations made to the HHS component agencies, we assessed the effectiveness of corrective actions taken by these agencies to resolve the cybersecurity weaknesses identified in our prior reports.

Contact information: Jennifer R. Franks, (404) 679-1831, franksj@gao.gov

Nutrition Assistance

The Department of Agriculture has disbursed most of the additional funding provided for federal nutrition assistance programs during the pandemic to respond to increased demand, and recent legislative changes may help address challenges states faced implementing the programs earlier in the pandemic.

Entity involved: Food and Nutrition Service, within the Department of Agriculture

Key Considerations and Future GAO Work

In June 2020, we reported that states and local governments faced challenges operating federal nutrition assistance programs during the pandemic and that some vulnerable populations may not have access to assistance. We will continue to monitor challenges states and local agencies face in implementing federal nutrition assistance programs during the COVID-19 pandemic, as well as their use of program flexibilities authorized in relief laws. We will also continue to monitor the Food and Nutrition Service’s (FNS) use of COVID-19 relief funds and the agency’s efforts to help states collect and report accurate and reliable participation data.

Background

The COVID-19 pandemic has threatened to reverse recent gains in low-income households’ access to food, and has increased demand for federal nutrition assistance programs. The largest of these programs—the Supplemental Nutrition Assistance Program (SNAP)—served more than 35 million individuals per month on average in fiscal year 2019. In September 2020, the Department of Agriculture (USDA) estimated that one in 10 U.S. households were food insecure in 2019—meaning they lacked consistent access to food—continuing a downward trend for several years.[280] USDA does not yet have estimates on the extent of the increased need for assistance due to the pandemic’s effect on issues such as employment and food costs.

FNS, within USDA, administers SNAP and other federal nutrition assistance programs, including the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the Emergency Food Assistance Program (TEFAP) (see table). Eligibility criteria vary across FNS’s nutrition assistance programs, and individuals and households may receive assistance from multiple programs.

FNS also administers the Pandemic Electronic Benefits Transfer (Pandemic EBT) program—a new program authorized under the Families First Coronavirus Response Act (FFCRA) to provide benefits to households with children who would have received free or reduced-price school meals if not for school closures due to COVID-19.[281] All states are operating the program.[282] Pandemic EBT was set to expire at the end of fiscal year 2020, but on October 1, 2020, the Continuing Appropriations Act, 2021 and Other Extensions Act (Continuing Appropriations Act) extended the program through fiscal year 2021 and expanded it to include younger children affected by day care closures, among other provisions.[283]
Key Information on Federal Nutrition Assistance Programs during the COVID-19 Pandemic

Program

Description

FY 2020 appropriation ($)

Total COVID-19 funding ($)

COVID-19 expenditures as of September 30, 2020

SNAP

Provides low-income individuals and households with benefits to purchase allowed food items and achieve a more nutritious diet.

56.2 billiona

15.5 billion

FNS has disbursed all $15.5 billion.

WIC

Provides eligible low-income women, infants, and children up to age 5 who are at nutrition risk with nutritious foods to supplement diets, information on healthy eating, and referrals to health care.

6 billion

500 million

FNS has not needed to use any of the additional WIC funding and plans to disburse the funds in fiscal year 2021.

TEFAP

Provides groceries to low-income individuals through food banks.

401.9 million

850 million

FNS has disbursed $257.4 million.

Pandemic EBT

Provides benefits to purchase food to households with children who would have received free or reduced-price school meals if not for school closures due to COVID-19.

Indefinite appropriation of necessary amounts

12.8 billionb

FNS has disbursed $8.4 billion.
Source: GAO analysis of relevant provisions of the Families First Coronavirus Response Act and the CARES Act; information from the Department of Agriculture’s Food and Nutrition Service; and the Further Consolidated Appropriations Act, 2020, and the Joint Explanatory Statement accompanying the Further Consolidated Appropriations Act, 2020 (fiscal year 2020 appropriations). | GAO-21-191

Notes: COVID-19 = Coronavirus Disease 2019, Pandemic EBT = Pandemic Electronic Benefits Transfer, SNAP = the Supplemental Nutrition Assistance Program, TEFAP = the Emergency Food Assistance Program, and WIC = the Special Supplemental Nutrition Program for Women, Infants, and Children.
aThis amount is the fiscal year 2020 appropriation for SNAP benefits only. SNAP also receives funding for administrative costs, employment and training activities, and other purposes.
bThis amount is the apportionment for Pandemic EBT as of September 30, 2020. This amount will increase as states implement Pandemic EBT in fiscal year 2021.

Overview of Key Issues

Spending for federal nutrition assistance programs increased during the pandemic, but data reliability issues have kept USDA from reporting data on participation increases.

SNAP. In fiscal year 2020, FNS provided approximately $75 billion in SNAP benefits—nearly matching the historic high for the program, according to FNS data.[284] This amount includes the entire fiscal year 2020 appropriation for benefits, the $15.5 billion provided for SNAP in the CARES Act, and approximately $4 billion in SNAP reserves, according to FNS data.[285] Increases reflect both increases in participation and emergency increases in the amount of certain households’ benefits. Through October 2020, nearly all states were continuing to issue emergency allotments authorized in FFCRA, which increased some households’ monthly SNAP benefits.[286] FNS estimated that emergency allotments increased SNAP expenditures by about $2 billion per month in fiscal year 2020.

Though increases in SNAP expenditures reflect, in part, increases in participation, FNS does not currently have reliable data on SNAP participation during the pandemic. In August 2020, FNS announced it had identified significant issues with the accuracy of state-reported data, and that FNS would not release updated program data until it could resolve the issues. Specifically, FNS noted that SNAP participation data beginning in April 2020 might erroneously include Pandemic EBT participants, leading to larger-than-actual estimates for SNAP participation. Consequently, SNAP data for March 2020 are the most recent available that were not subject to these data quality issues. The March 2020 data do not yet reflect increases in SNAP participation during the pandemic, nor do they account for any additional changes in eligibility or demand for SNAP after the Federal Pandemic Unemployment Compensation program expired in July 2020.[287]

FNS officials said the agency is actively working to address SNAP data quality issues, including reiterating reporting guidance to states and changing how FNS’s data systems generate reports. While FNS worked to identify the root cause of the issues, it opted not to release participation data for SNAP or any other federal nutrition assistance programs for May 2020. FNS officials said they expect that states were able to report reliable data for June and July 2020, but as of mid-November 2020, FNS had not released any data beyond April 2020.

WIC. The April 2020 data show that WIC participation remained steady early in the pandemic—approximately 6.3 million individuals received WIC benefits that month, a slight increase from March 2020, but a slight decrease compared to April 2019.[288] FNS officials said the agency had sufficient WIC funding available from the regular fiscal year 2020 appropriation to support states and continue to provide benefits and services to WIC participants throughout fiscal year 2020. FNS had not disbursed any of the $500 million provided for WIC in FFCRA, as of September 30, 2020, according to FNS data. The funds are available through fiscal year 2021, and FNS officials said the agency plans to disburse the funds during that fiscal year.

TEFAP. States do not report data to FNS on the number of individuals or households served through TEFAP, and therefore nationwide data on TEFAP participation are not available. However, TEFAP expenditures reflect the increased need for assistance due to the COVID-19 pandemic.[289] As of September 30, 2020, FNS had disbursed $257.4 million of the $850 million appropriated for TEFAP by FFCRA and the CARES Act. The funds are also available through fiscal year 2021.

Challenges to implementing federal nutrition assistance programs during the COVID-19 pandemic. The COVID-19 relief laws provided flexibilities for operating some federal nutrition assistance programs during the pandemic. FNS also provided guidance on how states could adjust operations consistent with existing program regulations. These adjustments helped states administer the programs during the pandemic, such as by operating the program remotely to minimize exposure to COVID-19 for state employees and program participants, according to FNS and state officials. However, states also identified several challenges to implementing these programs during the pandemic, including with FNS’s approach to reviewing states’ requests for various flexibilities and the timing of FNS’s decisions.

SNAP. FFCRA allowed states to request from FNS various adjustments to federal requirements for SNAP related to how states issue benefits, review applications, and report data during the pandemic. In several cases, FNS required states to apply for extensions of certain adjustments each month, rather than extending adjustments for multiple months. FNS used a month-to-month approach to minimize program integrity issues, discourage states from using long-term adjustments, and encourage states to return to normal operations as soon as possible, according to officials.

FNS had instructed states to prepare for a “new normal” for SNAP operations in September 2020. Specifically, FNS notified states via email and letters that extensions of SNAP adjustments would be extremely limited and based on the individual circumstances in a given state, such as substantial increases in new applications or sizable increases in case backlogs. FNS’s website did not include information on the criteria or thresholds FNS used to determine if state data warranted extensions of SNAP adjustments. When we requested this information, FNS provided two emails sent to FNS regional offices in August 2020 outlining the criteria states needed to meet in order to adjust certain eligibility verification and interview requirements. For example, according to the emails, states could demonstrate a need for these adjustments if they had experienced a 50 percent increase in new SNAP applications in the previous 3 months compared to the same months in the prior year.

Representatives we interviewed from several national research and advocacy organizations noted that FNS’s month-to-month approach to reviewing and extending SNAP adjustments caused uncertainty for states and made implementing the program difficult. For example, they explained that in some cases FNS decided late in the preceding month to approve or deny a state’s request to extend an adjustment for the subsequent month (e.g., informing states of decisions for July 2020 in late June 2020). They explained that such adjustments included those related to interviewing new SNAP applicants or assessing participants’ continued eligibility. States had to plan for SNAP operations without knowing whether FNS would approve their extension request each time, according to these representatives. We asked FNS to provide its rationale for waiting until the end of the month to approve or deny certain state requests for SNAP adjustments. FNS officials said they issued decisions as soon as they were ready.

In a September 2020 letter to FNS, attorneys general from 22 states echoed many of these challenges, including that requesting extensions each month was time-consuming. They added that FNS had not provided clear public guidance on how much or what kind of data states would need to provide to obtain SNAP adjustments in fall 2020.[290]

Provisions in the Continuing Appropriations Act may help address the challenges states faced working with FNS to implement SNAP during the pandemic. The Continuing Appropriations Act granted states broader authority to adjust SNAP operations into fiscal year 2021 without obtaining prior approval from FNS. For example, states can adjust deadlines for interviewing SNAP applicants and assessing participants’ continued eligibility based on the needs of their state.[291]

WIC. In contrast to SNAP, FNS generally provided states with longer-term waivers for WIC operations during the pandemic, but in some cases issued extensions only days before waivers were set to expire, leading to some uncertainty among states. Specifically, on June 29, 2020, FNS extended WIC waivers through the end of fiscal year 2020; the waivers were set to expire on June 30, 2020. On September 21, 2020, FNS further extended certain WIC waivers until 30 days after the COVID-19 public health emergency ends; the waivers were set to expire on September 30, 2020. We asked FNS to provide its rationale for waiting to extend WIC waivers until a few days before expiration. FNS officials said they had heard from state partners about the continued need for WIC waivers and accommodated states’ requests to ensure there were no gaps in service. The Continuing Appropriations Act extended USDA’s authority to grant certain WIC waivers through fiscal year 2021.[292] FNS officials said they would continue to support states as they provide services to WIC participants and work toward a safe and timely transition back to in-person appointments and regular documentation.

WIC waivers allowed individuals to apply for WIC without being physically present in a WIC office and allowed states to issue benefits remotely, among other things. Representatives from the National WIC Association said the timing of FNS’s decisions about extensions to WIC waivers caused uncertainty among states about program operations, such as when local WIC offices would need to return to in-person services. Because FNS extended WIC waivers until after the public health emergency ends, states now have greater clarity on waivers available for WIC at the beginning of fiscal year 2021.

TEFAP. FFCRA and the CARES Act did not provide states with additional authority to adjust TEFAP operations during the pandemic, though states could revise their TEFAP distribution plans consistent with current program regulations. FNS officials said the agency approved the majority of TEFAP distribution plan revisions that states have submitted during the pandemic. They said that common revisions included accommodations for social distancing, removing signature requirements, simplifying income eligibility requirements, and changing state policy on using a proxy system for TEFAP distributions to allow another individual to pick up food for an eligible household.

In addition, organizations we interviewed identified several challenges to implementing TEFAP during the pandemic. For example, representatives from the American Commodities Distribution Association and Feeding America—members of these organizations distribute food for TEFAP and other FNS programs—said it was difficult for food banks to collect household information at TEFAP distribution sites due to social distancing protocols.[293] These representatives said that FNS has also canceled multiple TEFAP food orders during the pandemic—such as orders for canned meats, soups, and vegetables—which has left food banks without the commodities they expected to distribute to participants. For example, representatives from one organization noted that food banks are having a particularly difficult time weathering order cancelations at a time when they are receiving less in food donations and have fewer state agency staff available to process orders.

FNS officials and representatives from these organizations explained several factors that contributed to canceled TEFAP orders during the pandemic, including that no vendors bid on a given order, the food was unavailable due to supply chain issues, and increased costs for transportation and raw materials. According to FNS data, the magnitude of canceled TEFAP orders in terms of both estimated value and total truckloads was similar from March to September 2020 compared to the same months in 2019.

Agency Comments

We provided a draft of this enclosure to FNS and the Office of Management and Budget (OMB) for review and comment. FNS provided technical comments, which we incorporated as appropriate. OMB did not provide comments.

GAO’s Methodology

To conduct our work, we reviewed the most recent FNS data on participation as of mid-November 2020 and expenditures as of September 30, 2020. With the exception of SNAP and Pandemic EBT participation data after March 2020, we determined these data were sufficiently reliable for the purposes of reporting on levels of participation in the programs and related expenditures during the pandemic. We also reviewed relevant federal laws, regulations, agency guidance and documents, and FNS’s written responses to our questions. Additionally, we interviewed officials from the American Public Human Services Association; the National WIC Association; the American Commodities Distribution Association; and several national research and advocacy organizations, including the American Enterprise Institute, the Center on Budget and Policy Priorities, Feeding America, the Food Research and Action Center, and No Kid Hungry. While not representative, information gathered from these interviews provides examples of challenges states faced implementing nutrition assistance programs during the COVID-19 pandemic.

Contact information: Kathryn A. Larin, (202) 512-7215 or larink@gao.gov

Child Welfare

Child welfare agencies face challenges ensuring the well-being of children impacted by the COVID-19 pandemic, and to assist them, the Administration for Children and Families has distributed CARES Act funds; provided guidance and flexibilities, such as on conducting virtual visits with foster families; and facilitated information sharing.

Entity involved: The Administration for Children and Families, within the Department of Health and Human Services

Key Considerations and Future GAO Work

Physical distancing measures to prevent the spread of COVID-19 and the pandemic’s effects on the economy have disrupted operations for state and local child welfare agencies. We plan to continue work to understand how these agencies have responded to needs stemming from the pandemic and what lessons can be learned to help them better respond to such events in the future.

Background

Though states are primarily responsible for administering their child welfare programs, the Department of Health and Human Services’ (HHS) Administration for Children and Families (ACF) distributes and oversees federal funding that states can use for these programs. One of the primary sources of federal funding authorized for child welfare services is Title IV-B of the Social Security Act.[294] In fiscal year 2020, approximately $268.7 million was provided to states under Title IV-B subpart I, and the CARES Act appropriated an additional $45 million for child welfare services as authorized under Title IV-B subpart 1 to be used to prevent, prepare for, and respond to COVID-19.[295],[296]

State child welfare programs provide a continuum of services intended to prevent the abuse or neglect of children; ensure they have safe, permanent homes; and promote the well-being of families.[297] For example, state and local child welfare agencies receive and investigate reports of child abuse and neglect, and assess child and family needs. For children who are removed from their homes, child welfare caseworkers must visit them in foster or relative homes or in other living arrangements to ensure their health, education, and other needs are met.

Caseworkers also facilitate visits between children in foster care and their biological parents and siblings. For children exiting foster care, caseworkers may coordinate family reunifications, adoptions, and legal guardianships, or provide transitional supports such as housing and job search services for children who age out of care. State juvenile or family courts are also involved in decisions regarding a child’s removal, placement, and services.

Overview of Key Issues

Disruptions due to the COVID-19 pandemic have raised a number of concerns about the well-being of children and families and the continuity of child welfare services. Representatives from eight national organizations that conduct child welfare advocacy, training, and research described these concerns, including:
  • Declines in child abuse reports. Representatives from five of the eight national organizations we interviewed raised concerns about declines in child abuse reports, particularly as some noted that families may be experiencing increased stress and hardship during this time and children have less frequent contact with mandatory reporters, such as school and medical personnel. Though nationwide data are unavailable, one national research organization reported that in March 2020, some states noted a decline of between 20 and 70 percent in the number of child abuse reports.[298] Representatives from three national organizations said that while reporting declines are concerning, little is known about the extent to which abuse is occurring. One representative told us that studies are under way to understand the implications of reporting declines.
  • Court delays in child welfare decisions. Representatives from five national organizations discussed how court closures and limited schedules, particularly at the beginning of the pandemic, delayed decisions in child welfare cases. They said delays can affect when children are able to see their biological parents, and how soon children can return home or be adopted.
  • Financial and housing instability for youth aging out of foster care. Representatives from four of the eight national organizations we spoke with described how the pandemic has exacerbated challenges for youth aging out of foster care. For example, one representative said the pandemic’s economic impact has left youth out of work. Another representative said the closure of college campuses may result in youth losing their housing. One representative noted that aging out of foster care is already difficult for youth, even without a pandemic, because they may lose the supports they received in foster care and may not have a network to rely on.
  • Health risks and limitations with in-person visits for children in foster care. Representatives from five national organizations discussed challenges state child welfare agencies faced early in the pandemic either accessing personal protective equipment or technology needed to protect the health of caseworkers, families, and children while continuing visits to ensure children’s safety and well-being. For example, representatives from two national organizations said agencies struggled to get caseworkers designated as essential personnel so they would have priority access to masks, hand sanitizer, and other personal protective equipment. Representatives from three national organizations said agencies also faced challenges obtaining laptops, cellphones, internet, and other technology for child welfare caseworkers, families, and children so that caseworkers can visit children in foster homes and children can visit their biological families virtually. We plan to examine these and other ongoing challenges for state child welfare agencies as part of our continuing work.
  • Overall budgetary constraints for child welfare agencies. Representatives from five national organizations raised concerns about budgetary constraints for child welfare agencies as a result of the pandemic’s economic impact on state budgets. For example, one representative explained that decreases in state revenues during the pandemic contributed to decisions by some states to implement spending cuts, including for child welfare services. Another representative said limited funding has affected agencies’ ability to assist service providers as well as families caring for children in foster care, including some who may be in financial distress or have additional needs due to school closures.

To help child welfare agencies address the impacts of COVID-19, ACF has distributed funds, provided guidance and flexibilities, and facilitated information sharing. ACF reported that it issued the supplemental grant awards from the $45 million provided under the CARES Act to all Title IV-B grantees on April 23, 2020, and that grants were awarded according to statutory formula.[299] The amounts provided to states ranged from $15,686 to $4,690,717, with an average of $847,907 per state. According to ACF officials, examples of early actions by states include purchasing personal protective equipment for child welfare caseworkers and technology for families and children; extending support services to youth who have aged out of foster care (e.g., up to age 23); and providing additional funds to support foster care families.

ACF has also issued guidance and flexibilities to help state child welfare agencies address the effects of the pandemic, including concerns described by the national organization representatives with whom we spoke (see table). Last, ACF has met with various stakeholder groups to listen to their concerns, and facilitated phone calls with state child welfare officials and others to share information on actions taken during the pandemic. For example, ACF officials said the agency has met with human services, parent, youth, foster care, and legal organizations in addition to state agency staff, and has conducted two town halls with older and transitioning youth.
Examples of ACF Guidance and Flexibilities Provided to Help State Child Welfare Agencies Respond to Pandemic Concerns Described by National Organizations

Concerns related to child welfare services

ACF guidance and flexibilities

Declines in child abuse reports

A joint letter to stakeholders with HHS’s Health Resources and Services Administration on May 28, 2020, outlines concerns about the well-being of families during the pandemic and encourages continued partnerships with families and providers as well as virtual service delivery

Court delays in child welfare decisions

A letter to child welfare legal and judicial leaders on March 27, 2020, encourages them to continue hearings for child welfare cases as required under law, and underscored the need for children in foster care to have ongoing contact with their parents

A letter to chief justices and state court administrators on April 14, 2020, outlines opportunities to use existing federal funds for court improvement programs to support telework and videoconferencing capabilities for virtual hearings

Guidance on April 16, 2020, through ACF’s Capacity Building Center for Courts, outlines best practices for virtual hearings in child welfare cases

Financial and housing instability for youth aging out of foster care

A letter to child welfare agencies on March 12, 2020, encourages them to contact current and former foster youth in colleges or other settings who may need assistance while their campus is closed

Program instructions to child welfare agencies on May 8, 2020, provide flexibilities for agencies to extend federal support to youth in foster care up to age 21, such as by waiving education and employment requirements for youth if they are unable to meet them due to the pandemic

A letter to child welfare agencies on May 26, 2020, outlines opportunities to use existing federal funds to extend services for youth currently and formerly in foster care

Health risks and limitations with in-person visits for children in foster care

A letter to child welfare agencies on March 18, 2020, provides flexibilities for caseworkers to conduct required visits with children in foster care virtually. A letter issued on April 15, 2020, expands on these flexibilities and outlines flexibilities for new foster parent fingerprints to be collected for background checks

A letter to governors on April 17, 2020, encourages them to classify child welfare caseworkers and providers as essential personnel to allow them greater access to personal protective equipment

Overall budgetary constraints for child welfare agencies

A letter to child welfare agencies on April 17, 2020, outlines opportunities to use existing child welfare funds for personal protective equipment and cellphones

Program instructions to child welfare agencies on June 8, 2020, provide information on the allowable uses of and reporting requirements for funds provided under the CARES Act
Source: GAO analysis of information from the Department of Health and Human Services’ (HHS) Administration for Children and Families (ACF) and obtained in interviews with representatives from eight national advocacy, training, and research organizations. | GAO-21-191

ACF plans to collect information on states’ use of the additional child welfare funds provided under the CARES Act. The agency required states to submit a brief narrative in July 2020 describing their plans for using the funds. We will examine these plans as part of our continuing work. States will be required to submit information on how they used these funds as part of their regular annual reports required under Title IV-B of the Social Security Act, which are due in June 2021.

Agency Comments

We provided HHS and the Office of Management and Budget with a draft of this enclosure. Neither agency had any comments on the draft enclosure.

GAO’s Methodology

To conduct this work, we reviewed relevant federal laws and regulations and ACF policies and guidance. We also interviewed representatives from eight national organizations that conduct child welfare related advocacy, training, and research, and may specialize in certain aspects of child welfare, such as the workforce, foster youth, and family courts.

Contact information: Kathryn A. Larin, (202) 512-7215, larink@gao.gov

Leave Benefits and Tax Relief for Employers

The Department of Labor is reviewing employee complaints about potential employer violations of paid leave requirements, and the Internal Revenue Service continues to process employers’ claims for refundable tax credits and employer payroll tax deferrals to mitigate the cost of paid leave and other pandemic related costs.

Entities involved: Department of Labor; Department of the Treasury, including the Internal Revenue Service; and the Small Business Administration

Key Considerations and Future GAO Work

Administering and enforcing the paid leave provisions of the Families First Coronavirus Response Act (FFCRA) helps ensure that employers covered under FFCRA (covered employers) are aware of their obligations under the law and that eligible employees understand their rights and receive the benefits to which they are entitled. We have ongoing work that will examine the Department of Labor’s (DOL) efforts to enforce FFCRA paid leave provisions.

We will also examine information on employers’ use of tax credits under FFCRA and the CARES Act as the Internal Revenue Service (IRS) processes employment tax data on returns filed electronically and catches up on the paper returns.

As a result of finalizing a data sharing agreement with the Small Business Administration (SBA), IRS received Paycheck Protection Program (PPP) loan data on September 25, 2020. These data will help IRS ensure that PPP loan recipients did not inappropriately claim the Employee Retention Credit. On October 29, IRS officials said that they plan to use the SBA loan data but did not provide any documentation or timeframes for this plan. We will continue to monitor these issues and will include updates in our bimonthly CARES Act reports and in a separate report planned for 2021.

Background

FFCRA, as amended by the CARES Act, requires covered employers to provide emergency paid sick leave and expanded family and medical leave to eligible employees affected by COVID-19, through December 31, 2020.[300] FFCRA and the CARES Act also provide tax credits to mitigate the cost of paid sick and family leave for covered employers, as well as provide an employee retention credit for all employers, among other tax relief.

FFCRA paid leave provisions for employees. Covered employers generally must provide eligible employees (1) up to 80 hours of emergency paid sick leave, subject to daily and aggregate payment caps, and (2) up to 12 weeks of emergency family and medical leave, including 2 weeks unpaid and 10 weeks paid at no less than two-thirds the eligible employee’s regular rate of pay, subject to daily and aggregate payment caps.[301] All employees of a covered employer are eligible to take emergency paid sick leave regardless of their duration of employment. Moreover, all employees who have been employed by a covered employer for at least 30 calendar days are eligible to take expanded family and medical leave. However, an employer may exclude employees who are health care providers or emergency responders from the application of these leave requirements.

Covered employers generally face liability for not providing or for improperly denying emergency paid sick leave or expanded family and medical leave or for discharging, disciplining, or discriminating against any employee for taking either type of leave.[302] Covered employers include most public employers and private employers with fewer than 500 employees. Small businesses—those with fewer than 50 employees—may qualify for an exemption from certain paid leave requirements. More specifically, if an employee requests leave due to school, place of care, or child care provider closures or unavailability and the requested leave would jeopardize the viability of the business, a small business may claim an exemption from providing this leave.[303]

DOL’s Wage and Hour Division (WHD) administers and enforces FFCRA paid leave requirements. Employees who believe their covered employer violated FFCRA may call a toll-free number for assistance or to file a complaint. When an employee files a complaint related to FFCRA paid leave provisions, WHD determines if it meets the criteria for investigation. If so, it registers the complaint as a case, determines the priority level of the complaint, and determines what type of compliance action to take.

There are four types of compliance actions for FFCRA complaints—conciliation, office audit, limited investigation, or full investigation—with conciliations requiring WHD to utilize minimal resources and full investigations requiring WHD to allocate the most resources. The type of compliance action taken depends on factors such as the number of employees involved, level of resources involved, or the level of fact finding required to investigate the complaint. The different compliance actions are discussed in greater detail later. In addition to taking compliance actions in response to complaints, WHD may initiate compliance actions—known as agency-directed actions—to expand on an existing complaint or based on a lead from another source, such as a newspaper account or a federal or state agency. However, WHD officials said the vast majority of agency-initiated investigations are data-driven initiatives in key priority industries.

Tax credits for employers. IRS is administering tax credits authorized by the FFCRA and CARES Act among other tax relief. The Joint Committee on Taxation estimates that these provisions will lead to about $172 billion in foregone revenue for fiscal years 2020-2030. The IRS’s capacity to implement new initiatives, such as the CARES Act tax measures, is an ongoing challenge cited in our 2019 High Risk Report. The tax provisions include:
  • Paid leave credits. Businesses and tax-exempt organizations with fewer than 500 employees, as well as self-employed individuals, are eligible for refundable FFCRA credits.[304] The credits are equal to qualified leave wages, plus the employer share of Medicare taxes paid with respect to qualified wages and allocable health plan expenses, from April 1 through December 31, 2020. Credit recipients who receive PPP loans cannot count the wages paid for by the credit as payroll costs toward loan forgiveness.[305]

    Payroll tax credits may be claimed on the employer’s employment tax return, typically Form 941, Employer’s Quarterly Federal Tax Return. To receive immediate relief, employers may reduce their semiweekly or monthly payroll tax deposits by the amount of their credit.[306] If an anticipated credit amount remains after reducing deposits, the employer may receive an advance refund by filing Form 7200, Advance Payment of Employer Credits Due to COVID-19. Form 7200 must be submitted using electronic fax (e-fax).
  • Employee Retention Credit. Under the CARES Act, eligible employers of any size—including tax-exempt entities and self-employed individuals with employees—can receive the refundable Employee Retention Credit. The credit equals 50 percent of qualified wages (up to $10,000 per employee for a maximum credit of $5,000) paid from March 13 through December 31, 2020, including certain health care expenses.[307] Eligible employers are those who experience, in calendar year 2020, either (1) full or partial suspension of operations due to government orders limiting activity in response to COVID-19 during any calendar quarter, or (2) a decline in gross receipts of more than 50 percent, compared with the same quarter in 2019.

    PPP recipients are not eligible for the Employee Retention Credit, except for certain employers that repaid their PPP loans by May 18, 2020.[308] Qualified leave wages for which FFCRA credits are allowed are not included in qualified wages for which an employer may claim the Employee Retention Credit, among other wages for which an employer may not claim the Employee Retention Credit.[309] Employers can claim the credit on their employment tax returns and may reduce payroll tax deposits by the credit amounts, or file Form 7200 for advance refunds.
  • Deferred payroll tax payments for employer share of Social Security. The CARES Act granted all employers the option to defer deposits and payments of the employer share of Social Security tax that they would otherwise be required to make during the period beginning March 27 through December 31, 2020, and payments of the tax imposed on wages paid during that period.[310] Self-employed individuals may defer half of their Social Security taxes imposed on net earnings from self-employment during the period beginning March 27 through December 31, 2020.[311] Deferred deposits are to be reported on Form 941.

Overview of Key Issues

Administration and enforcement of FFCRA paid leave provisions. WHD officials said they have conducted outreach, provided customer service, and issued guidance on FFCRA paid leave provisions. They have also responded to complaints related to FFCRA paid leave provisions; WHD reported that it has received 4,233 FFCRA paid leave complaints, of which 3,459 (82 percent) resulted in a compliance action and 595 (14 percent) resulted in no action.[312] WHD also reported initiating additional agency-directed compliance actions, for a total of 3,463 compliance actions, as of September 16, 2020.
  • As of September 16, 2020, WHD reported conducting 2,160 outreach events to educate employers about their obligations under the new law and to make employees aware of their rights. These efforts included conducting compliance consultations with employers, holding webinars, and making presentations, among others.
  • WHD officials said that more calls to the toll-free number are now being answered by WHD staff rather than by an automated system to help reach resolution on questions or complaints faster.
  • WHD has issued and updated its rules and guidance since FFCRA paid leave provisions went into effect. Most notably, DOL issued revisions and clarification to its April 2020 temporary rule implementing FFCRA paid leave provisions, effective September 16, 2020.[313] DOL made these revisions in response to a federal court ruling that invalidated certain provisions of the April 2020 temporary rule.[314] DOL also revised its frequently asked questions website to reflect these revisions. Among other things, DOL revised its definition of “health care provider” because the federal court found DOL’s original definition to be overly broad. DOL revised the definition to include only employees who either (1) meet the definition of a health care provider under the Family and Medical Leave Act regulations or (2) are employed to provide diagnostic services, preventative services, treatment services or other services that are integrated with and necessary to the provision of patient care, which, if not provided, would adversely impact patient care.[315] The April 2020 rule estimated that 9 million individuals employed in the health care and social assistance industry by employers with fewer than 500 employees were exempt from utilizing FFCRA paid leave. These individuals could be affected by the September 2020 change in the health care provider definition, though the impact of the change could affect more individuals than the April 2020 rule estimated. An August 2020 DOL Office of Inspector General report found that DOL’s estimate of 9 million individuals affected by the April 2020 rule may understate the true number of affected individuals.[316]

WHD began enforcement actions related to FFCRA paid leave provisions on April 18, 2020, after a limited stay of enforcement to enable public and private employers who are covered by the act to come into compliance with the new law.[317] To familiarize their staff with the law and instruct them on how to respond to complaints, WHD officials said they provided training to all WHD enforcement staff, conducted webinars, and issued guidance.

WHD reported that 2,398 (69 percent) of the 3,463 compliance actions it has taken had been concluded, as of September 16, 2020. The vast majority of compliance actions were concluded using a conciliation (see table below). WHD officials said that conciliation—which is limited to the correction of minor violations consisting of a single issue affecting only one or a few employees and does not involve any fact finding—is usually the most appropriate action for FFCRA paid leave complaints because most complaints are straightforward and involve only one or a few employees. They further said that the use of conciliation provides the quickest relief for the affected employee or employees, while educating the employer on their responsibilities. WHD officials said they use a variety of remedies for employees when a compliance action is concluded, such as requiring employers to pay lost wages, restore jobs that employees had lost, or provide leave.
Number and Type of Compliance Actions Related to Families First Coronavirus Response Act Paid Leave Provisions, as of September 16, 2020

Enforcement action

Number of cases registereda

Number of cases concludedb

Percent of cases concluded

Average number of days to conclude cases

Conciliation

2,811

2,146

76

13

Office Audit

623

248

40

59

Limited Investigation

12

3

25

71

Full Investigation

17

1

6

56

Total

3,463

2,398

69

50
Source: Department of Labor data. | GAO-21-191

aRegistered cases result from a complaint or an agency-directed action.
bWage and Hour Division officials said concluded cases are those that went through the entire investigation process. They said some cases result in a compliance action for which the Department of Labor is unable to complete the investigative process because, for example, an employer is out of business.

For complaints it receives from employees of small businesses, WHD officials said they may ask for documentation to support an exemption claim in the course of investigating a complaint. While small businesses do not formally apply or submit documentation to WHD to claim the exemption from providing paid leave for an employee due to school, place of care, or child care closures or unavailability, they must document the basis for the exemption for their own records and retain the documentation for 4 years. WHD officials said each small business must determine whether the exemption is warranted based on the specific circumstances of the individual employee and business.

WHD established new performance measures to capture its enforcement, outreach, and customer service efforts under FFCRA. WHD officials said they collected baseline data in fiscal year 2020 to determine the targets for these performance measures for fiscal year 2021 (see table below).
New FFCRA-related Performance Measures for Department of Labor’s Wage and Hour Division

Performance measure

FY 2020 resulta

FY 2021 target

Percent of Families First Coronavirus Response Act (FFCRA) conciliations concluded in 15 calendar days

78.6%

70%

Number of outreach events involving FFCRAb

2,160

200

Percent of public calls answered livec

87.4%

55%
Source: Department of Labor documentation. | GAO-21-191

aThese values are as of September 16, 2020.
bThe Department of Labor’s (DOL) FY 2021 Operating Plan did not include a FY 2020 result; however, DOL reported conducting 2,160 outreach events related to FFCRA paid leave.
cThis measure is not specific to FFCRA but includes all calls received by DOL’s call center.

IRS processing of tax credits and employer share of Social Security payroll tax deferrals. On September 22, 2020, IRS and SBA finalized a data-sharing agreement that allows IRS to use SBA data to help ensure that PPP loan recipients did not also inappropriately claim the Employee Retention Credit. IRS received data on September 25, 2020, and will periodically receive updated data. IRS officials said they plan to use SBA loan data to reverse inappropriately claimed credits but need to review the data before developing a programming plan to use it, and will not be able to use it while processing third-quarter employment tax returns.

As of October 29, 2020, there were filings claiming about $1.3 billion for the FFCRA leave tax credits and about $4.5 billion for the Employee Retention Credit (see table below).[318]
Summary of Claims Requested on Filed Quarterly Employment Tax Returns, as of October 29, 2020

Provision

Number of employers claiming

Dollars claimed
($ billions) a

Families First Coronavirus Response Act leave credits

149,830

1.3

Employee Retention Credit

26,604

4.5

Deferred employer-share Social Security tax

105,657

27.6
Source: Internal Revenue Service data. | GAO-21-191

Notes: The table includes second quarter electronically filed returns and 145,077 paper returns. The second quarter returns include amounts for the Employee Retention Credit from the end of the first quarter because legislation passed too late in the quarter to be reported then. Figures in this table include some electronically filed Forms 941 that have not yet been accepted and processed by IRS. Dollars claimed include advance credits also claimed on Form 7200. IRS continues to process a paper return backlog, which makes the data in the table above incomplete, particularly for small employers.
a The tax credit dollar figures we are reporting are as reported by taxpayers and are subject to taxpayer reporting error. These figures may differ from IRS’s reported figures because we are reporting what was filed on second quarter Form 941s without adjustments.

Of the 3.4 million quarterly employment tax return filings, less than 1 percent of employers filed for the Employee Retention Credit.

Of employers for whom the IRS collects data on closures, 197 employers claiming one of the tax credits or deferring payroll taxes reported their business would be closing or stopping payment of wages in the second quarter.[319] The 197 employers claimed $1,298,470 in tax credits through the paid leave credits and Employee Retention Credits and deferred $1,263,038 in employer share of Social Security payroll tax payments. IRS officials said they have existing rules and procedures—such as through bankruptcy proceedings—to collect taxes from closed businesses.

IRS continues to process a paper return backlog, which makes the data in the table above incomplete, particularly for small employers. Officials at a payroll professional organization we interviewed told us that employers filing Form 941 on paper are more likely to be smaller than those filing electronically. As of October 19, 2020, IRS facilities that process paper Forms 941 are operating at reduced capacity after being closed for months during the spring. IRS officials said they were experiencing a backlog and they have a goal to open all of the mail by November 9, 2020.

IRS also continues to process Forms 7200 for tax credit advance refunds. As of October 18, 2020, IRS had issued $583.17 million in advance credits.[320] Of the $5.7 billion in claims for the Employee Retention Credit and leave credits on the second quarter Forms 941, as of October 29, 2020, about 3 percent were filed as advance refunds through a Form 7200 filing.[321]

Officials at a payroll professional association told us that employers who filed a Form 7200 for advance refunds experienced long processing times in the spring that did not give them much advantage over filing a Form 941 and may have discouraged continued filings for advance refunds. IRS officials said the backlogs that occurred in the spring have been resolved. On average, IRS officials said they are processing employers’ Forms 7200 within 15 to 20 days from initial receipt to refund issuance. To prevent duplicate or improper payments, additional analysis may be warranted if an employer submits multiple forms during a specified period. Such analyses may cause longer processing times.

IRS designated 14,604 of the 26,748 submissions of Form 7200 claims it received as of October 19, 2020 as “rejected.” IRS sent letters to employers whose forms were rejected. According to IRS officials, the most common reasons for rejecting a Form 7200 claim were that the filer provided an unauthorized signature or filed a Form 7200 after submitting a Form 941 for the quarter or after the due date of the Form 941 for the quarter. Since IRS resumed sending mail on June 19, 2020, as of October 19, 2020 it has mailed 13,688 letters to employers whose Form 7200 claims were rejected.

Agency Comments

We provided IRS, Treasury, the Small Business Administration (SBA), the Department of Labor (DOL) and the Office of Management and Budget with a draft of this enclosure. IRS’s written comments are reproduced in appendix VI, and IRS and Treasury provided technical comments, which we incorporated as appropriate. SBA, DOL, and the Office of Management and Budget did not have any comments on this enclosure.

GAO’s Methodology

To conduct our work, we reviewed DOL data as of September 16, 2020, and IRS data as of October 29, 2020. We determined the data were sufficiently reliable for the purposes of this report. We also reviewed federal laws and agency documents; and interviewed officials at DOL and IRS and at payroll and tax professional associations.

Contact information: Thomas Costa, (202) 512-7215, costat@gao.gov; Jessica Lucas-Judy, (202) 512-9110, lucasjudyj@gao.gov

HUD Programs

While the Department of Housing and Urban Development continues to obligate CARES Act funding, as of September 2020, expenditures were low in some of its programs, particularly its community development and homelessness programs.

Entity involved: Department of Housing and Urban Development

Key Considerations and Future GAO Work

In June 2020, we noted concerns about the potential for grantee oversight and management challenges in the Department of Housing and Urban Development’s (HUD) CARES Act programs based on our prior work. Specifically, in our March 2019 report on Community Development Block Grant Disaster Recovery grants, we recommended that HUD develop and implement a comprehensive monitoring plan for its disaster recovery grant portfolio. In our July 2016 report on HUD management, we recommended that HUD incorporate management practices designed to improve agency governance and operations. HUD agreed with both recommendations but they remain open as of mid-October 2020. We maintain that by implementing these recommendations, HUD will be better positioned to address the challenges posed by COVID-19.[322]

Since June 2020, we have identified additional concerns regarding HUD grantees’ rate of expenditures. To help grantees expend funds, HUD plans to provide them with technical assistance and has issued clarifying guidance and additional waivers to provide grantees with more flexibility. We have ongoing work on HUD’s implementation and oversight of CARES Act funds.

Background

The CARES Act appropriated over $12 billion to HUD programs for purposes of providing additional resources to prevent, prepare for, and respond to housing needs related to COVID-19 (see figure).[323]

Status of Supplemental CARES Act Funding for HUD Programs, as of September 30, 2020

aThe CARES Act also appropriated $50 million to HUD for management and administration of CARES Act funding and $5 million to the HUD Office of the Inspector General for audits and investigations. Pub. L. No. 116-136, div. B, tit. XII, 134 Stat. at 601, 612.
bFunding for permanent supportive housing competitive grantees ($10 million) is to remain available until September 30, 2022.

Key programs include the following:
  • Community Development Block Grant Coronavirus Response (CDBG-CV). This program helps states and entitlement communities support a wide variety of activities, including emergency payments to families and individuals and business assistance.[324]
  • Emergency Solutions Grants Coronavirus Response (ESG-CV). This program supports homelessness assistance and prevention activities. Eligible activities include street outreach, temporary emergency shelter, rental assistance, and housing relocation and stabilization services. [325]
  • Office of Public and Indian Housing assistance for public housing agencies (PHA). This assistance helps with COVID-19-related expenses (for example, purchasing personal protective equipment), housing assistance payments, and regular eligible activities.[326]

The CARES Act provided HUD with broad authority to waive statutes and regulations related to many of its programs. For example, it waived CDBG’s 15 percent spending cap on public services (which include job training and childcare). HUD also issued waivers for PHAs allowing them to delay annual reexamination of family income and inspections.

Overview of Key Issues

Implementation challenges. As of September 30, 2020, HUD had obligated over $6.4 billion—or 52 percent—of its CARES Act funds, up from $2.26 billion, as of May 31, 2020. However, HUD data indicate that only about $2.1 billion—or 17 percent—had been expended.

Office of Community Planning and Development. About 1 percent of the $9 billion appropriated to CDBG-CV and ESG-CV had been expended as of September 2020. In September 2020, HUD officials and an industry association representative of CDBG and ESG grantees told us that low initial expenditures were due in part to grantees taking additional planning time, especially since some are designing new programs (for example, using CDBG-CV funds for rental assistance or business assistance).[327] The industry association representative also told us that CDBG grantees were hesitant to spend funds until HUD issued a Federal Register notice with guidance and program waivers—particularly since many are designing new programs. [328]

HUD officials told us that a number of ESG grantees also chose to wait for the publication of a similar notice for ESG-CV before making funding decisions.[329] HUD issued the CDBG-CV notice in August 2020 and the ESG-CV notice in early September 2020 (about 4 months after funding was initially available in April). In September 2020, HUD issued a waiver in response to grantee reports that individuals experiencing homelessness were staying in institutions longer due to COVID-19 (for example, longer hospital stays when infected with COVID-19 or extended jail stays due to delays in hearings when courts are closed or operating at reduced capacity). Specifically, the waiver expanded the definition of homelessness for the ESG-CV program to include homeless individuals who had stayed in such institutions for up to 120 days (an increase from the previous 90 days)—allowing greater flexibility for grantees’ usage of ESG-CV funds.[330]

HUD officials and the industry association representative also noted that some grantees may have limited capacity to quickly spend a large increase in funding.[331] To help grantees manage additional funds, the CARES Act provided CDBG-CV and ESG-CV with a total of $50 million for technical assistance to build grantees’ capacity. However, HUD data show that less than 3 percent of technical assistance funds had been expended, as of September 2020. With respect to ESG-CV, HUD officials told us that, as of mid-October 2020, they had held 12 training webinars, issued a toolkit on avoiding duplicating benefits between programs, and provided direct technical assistance to over 47 grantees, including assistance on COVID-19-related health and safety in collaboration with the Centers for Disease Control and Prevention. HUD officials also noted that ESG-CV technical assistance providers obligated $17 million in technical assistance funds. In early October 2020, HUD launched a CDBG-CV webpage where grantees can submit questions and request technical assistance for complex issues. HUD plans to roll out additional CDBG-CV technical assistance throughout 2021, including guidance for providing rental and economic development assistance, a virtual conference for its CARES Act grantees, and 10 problem-solving clinics. In March 2019, we reported that CDBG Disaster Recovery grantees that received funding in response to the 2017 hurricanes also experienced a lag in accessing funds and capacity issues.

Office of Public and Indian Housing. HUD announced funding allocations to PHAs in May and August 2020. However, PHA association representatives told us that PHAs were initially hesitant to spend funds due to a lack of clarity on eligible uses and because reporting requirements for the funds had not yet been issued. In August 2020, the Assistant Secretary for Public and Indian Housing sent a letter to PHA directors expressing concern about the slow expenditure of public housing operating funds and clarifying that these funds could be used for both COVID-19-related expenses and regular PHA expenses (e.g., maintenance costs).[332] In September 2020, HUD issued guidance on how PHAs should report the supplemental funds.[333] PHA associations with whom we spoke said that their members were using many of the waivers HUD implemented, particularly waivers on income recertification and inspections.[334]

Oversight challenges. According to HUD officials, HUD’s CARES Act Compliance Response Team (HCCRT) worked with program offices to identify top oversight risks—including effective monitoring and reporting—along with initial steps to address them.[335] To help ensure program offices’ existing data collection processes comply with CARES Act reporting requirements, HCCRT created a template for program offices to identify data and reporting needs and requirements and is developing specific guides for each program office based on this template. In addition, HCCRT is working with the program offices to develop strategies to oversee CARES Act-specific requirements remotely, such as preventing duplication of benefits. As of early October, HUD officials said they were developing a timeline for developing and implementing these strategies.

Further, several program offices reported concerns that staffing levels were insufficient for overseeing CARES Act funds and concerns about administering funds during the agency-wide shift to telework. In early November 2020, HUD officials commented that 96 new positions had been approved to help with CARES Act administration, of which 40 had been on-boarded and 39 were in the recruitment process.[336] Officials also told us that the Office of the Chief Human Capital Officer, in consultation with the Office of the Chief Financial Officer, developed an approach to streamline and expedite CARES Act hiring, which includes guidance for creating CARES Act-related job listings and a unique identification number that distinguishes CARES Act hires from other hires.[337] In mid-October 2020, HUD officials told us that the Office of Community Planning and Development had hired 11 employees to assist with CARES Act implementation and compliance activities.

Agency Comments

We provided HUD and the Office of Management and Budget with a draft of this enclosure. In its comments, reproduced in appendix V, HUD noted that funds from its Office of Community Planning and Development (which includes CDBG-CV and ESG-CV) are available for 3–6 years and provided more detail about its technical assistance efforts. In addition, HUD provided updated information on its hiring efforts and other technical comments, which we incorporated as appropriate. The Office of Management and Budget did not have any comments on this enclosure.

GAO’s Methodology

To conduct this work, we reviewed HUD guidance and documentation and written responses from HUD officials. In addition, we interviewed selected industry organizations representing CDBG-CV and ESG-CV grantees and PHAs to obtain their views on HUD’s administration and oversight of CARES Act funds. Their views are not generalizable to other associations that represent HUD grantees or PHAs, but offered important perspectives. We assessed the reliability of HUD’s data by comparing them to publicly available data and reviewing written responses from agency officials. We determined that the data were sufficiently reliable for reporting on the status of HUD’s CARES Act spending.

Contact information: Alicia Puente Cackley, (202) 512-8678, cackleya@gao.gov

Related GAO Products

Priority Open Recommendations: Department of Housing and Urban Development. GAO-20-500PR. Washington, D.C.: April 23, 2020.

Disaster Recovery: Better Monitoring of Block Grant Funds Is Needed. GAO-19-232. Washington, D.C.: March 25, 2019.

Department of Housing and Urban Development: Actions Needed to Incorporate Key Practices into Management Functions and Program Oversight. GAO-16-497. Washington, D.C.: July 20, 2016.

Unemployment Insurance Programs

Weekly news releases issued by the Department of Labor have improperly presented state-reported claims volumes as the number of individuals claiming benefits in unemployment insurance programs because the number of claims has not been an accurate approximation of the number of individuals claiming benefits during the pandemic. Each week, the agency publishes the number of weeks of unemployment benefits claimed by individuals in each state during the period, and reports the total count as the number of people claiming benefits nationwide. Department of Labor officials told us that they have traditionally reported the numbers in this way because they were a close approximation of each other. However, because backlogs in processing a historic volume of claims have led to individuals claiming multiple weeks of benefits at a time for previous weeks of unemployment, as well as other data issues, these traditional estimates have not been appropriate in the context of the pandemic. For example, by using claims counts to represent the number of people, individuals who submitted multiple claims are counted more than once in the Department of Labor’s estimate. At the same time, not all states have been included in each weekly estimate due to delays in states’ data submissions. As the demand for unemployment insurance benefits remains high, state resources are strained, and reports of fraud in the system continue, the Department of Labor has taken steps to monitor and assist states with program integrity issues.

Entity involved: Department of Labor

Recommendations for Executive Action

We are making the following two recommendations to the Department of Labor:

The Secretary of Labor should ensure the Office of Unemployment Insurance revises its weekly news releases to clarify that in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits.

The Secretary of Labor should ensure the Office of Unemployment Insurance pursues options to report the actual number of distinct individuals claiming benefits, such as by collecting these already available data from states, starting from January 2020 onward.

Key Considerations and Future GAO Work

The unemployment insurance (UI) system provides a vital safety net for individuals who become unemployed through no fault of their own, and this support is essential during widespread economic downturns. As certain CARES Act UI programs approach their scheduled expiration in December 2020, the UI system continues to experience high numbers of claims as a result of the COVID-19 pandemic. However, the Department of Labor (DOL) does not currently collect or report reliable counts of the number of individuals claiming benefits, which could inform policy makers and the public about how the size of the population being supported has changed during the pandemic, and the potential effects of the expiration of CARES Act benefits.

We continue to focus on the implications of persistently high numbers of claims for UI benefits. Enhanced benefits under the Federal Pandemic Unemployment Compensation program expired at the end of July 2020 and supplemental payments under the federal lost wages assistance program covered weeks of unemployment through September 5, 2020, at the latest. Individuals claiming benefits for unemployment after the expiration of these supplemental benefits will be more reliant on the benefits provided by the UI system in their state, and their household income may no longer exceed poverty guidelines. States also face continued financial pressure in paying claims. As of November 9, 2020, 21 states and territories held about $40.2 billion in federal loans to pay UI benefits.

We also remain concerned about potential fraud throughout the system. States have identified schemes that reportedly could account for tens of thousands of fraudulent claims and potentially millions of dollars in improper payments. Federal agencies are working with states to detect and respond to UI fraud. For example, DOL’s Office of Inspector General (OIG) designated UI as a high priority for addressing program integrity issues and has ongoing fraud investigations. We will continue to monitor OIG findings and DOL actions to provide guidance and support to states to help ensure UI program integrity.

Following a recommendation in our June 2020 report, DOL issued guidance on August 12, 2020, addressing potential risks that certain workers being paid wages with proceeds from the Paycheck Protection Program (PPP)—administered by the Small Business Administration—could also simultaneously be receiving UI benefits.[338] The guidance clarified that individuals working full-time and being paid through PPP are not eligible for UI, and that individuals working part-time and being paid through PPP would be subject to certain state policies, including policies on partial unemployment, to determine their eligibility for UI benefits.

Background

The UI program is a federal-state partnership that provides temporary financial assistance to eligible workers who become unemployed through no fault of their own. States design and administer their own UI programs within federal parameters, and DOL oversees states’ compliance with federal requirements, such as ensuring states pay benefits when they are due. Regular UI benefits—those provided under the state programs in place before the CARES Act was enacted—are funded primarily through federal and state taxes levied on employers.[339]

The CARES Act created three federally funded temporary UI programs that expanded benefit eligibility and enhanced benefits.[340]

1. Pandemic Unemployment Assistance (PUA), available through December 2020, generally authorizes up to 39 weeks of UI benefits to individuals not otherwise eligible for UI benefits, such as self-employed and certain gig economy workers, who are unable to work as a result of COVID-19.[341]

2. Federal Pandemic Unemployment Compensation (FPUC) generally authorized an additional $600 benefit through July 2020 that augmented weekly benefits available under the regular UI and CARES Act UI programs.[342]

3. Pandemic Emergency Unemployment Compensation (PEUC), available through December 2020, authorizes an additional 13 weeks of UI benefits to those who exhaust their regular UI benefits.[343]

On August 8, 2020, the President signed a memorandum directing the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) to provide up to $44 billion in lost wages assistance (LWA).[344] Pursuant to the presidential memorandum, upon receiving a FEMA grant, states and territories may provide eligible claimants $300 or $400 per week—which includes a $300 federal contribution—in addition to their UI benefits.[345]

Overview of Key Issues

The number of weekly initial claims for UI benefits remains persistently high, though at a lower level than early in the pandemic. UI benefits provide a vital safety net for unemployed individuals. DOL reported 723,105 initial claims for regular UI benefits and 298,154 initial claims for PUA benefits were submitted nationwide during the week ending November 7, 2020.[346] The number of regular UI initial claims submitted in recent weeks is considerably lower than the peak of about 6.2 million submitted in the week ending April 4 (see figure). Inconsistent state reporting of PUA initial claims limits the conclusions that can be drawn about trends in that program. The general decline in overall initial claims suggests that workers are losing jobs at a slower rate nationwide than in the early weeks of the pandemic. However, the number of regular UI initial claims submitted each week has remained relatively steady since the week ending August 8, and remains considerably higher than pre-pandemic levels. For example, the 723,105 regular UI initial claims submitted during the week ending November 7, 2020—which does not include the 298,154 PUA initial claims—is about 3 times as high as the 238,996 submitted during the corresponding week in 2019.

Weekly Initial Claims Submitted Nationwide for Regular Unemployment Insurance (UI) and Pandemic Unemployment Assistance (PUA) Benefits

Notes: The weekly counts of initial claims shown in the figure are not seasonally adjusted. Counts for weeks through October 24, 2020 are from Department of Labor (DOL) data files that include any adjustments submitted by states as of November 12, 2020. Counts for the weeks ending October 31 and November 7 are from DOL’s weekly report released on November 12, and the November 7 numbers reflect advance initial claims, which are preliminary and subject to revision. The number of states reporting PUA data is out of a potential total of 53 states and territories.

In addition, the number of initial claims is not intended to measure how many claimants were determined eligible to receive benefits or how many who filed for benefits earlier in the pandemic are still unemployed. For example, analyses of state data by the California Policy Lab show that the number of initial claims submitted in California peaked at about 1.1 million for the week ending March 28, 2020, and then fell to a low of about 298,000 for the week ending May 23.[347] However, because some individuals remain unemployed for multiple weeks and can submit claims retroactively, the number of initial claims is not necessarily equivalent to the number of unemployed individuals receiving benefits each week. In California, the number of individuals who received benefits for unemployment increased from about 3.1 million for the week ending March 28 to about 4.6 million for the week ending May 23, even as the number of initial claims declined.[348] In addition, from early June through mid-July, the California Policy Lab also found that about 1 to 3 percent of PUA claimants and about 4 to 5 percent of regular UI claimants exited the program each week due to, for example, obtaining employment.

DOL’s characterization of state-reported continued claims as representing the number of individuals claiming benefits is not appropriate in the context of the pandemic. DOL’s weekly UI news releases include valuable state-reported data on claims volume, but they have improperly represented the number of unique individuals claiming UI benefits and the changes in these numbers from week to week. Each week, DOL publishes the number of continued claims submitted by states in all UI programs (i.e., weeks of unemployment claimed by individuals during a reporting period), and reports it as the total number of people claiming benefits in all programs.

While DOL officials told us that they have traditionally used the number of continued claims to represent the number of individuals claiming benefits because they were a close approximation of each other, various issues arising from the pandemic have made this practice problematic—potentially overstating the number of individuals in certain circumstances and understating the number in others.

Prior to the pandemic, according to DOL officials, the number of continued claims approximated the number of people claiming benefits because each week individuals typically filed a claim for just the previous one week of continued unemployment.[349] However, this has not been the case during the pandemic because of challenges implementing the newly created PUA program and backlogs in processing historic numbers of claims in many states. For example, for the week ending October 24, 2020, states reported about 21.2 million continued claims in all programs—about 6.8 million in the regular UI program, about 9.4 million in the PUA program, and about 4.9 million in other programs, such as the PEUC program.[350] However, the number of continued claims is not equivalent to the number of individuals claiming benefits.

If an individual claims benefits for multiple weeks of unemployment during a single reporting period, each week is counted as a separate continued claim. This could happen if an individual was unemployed for multiple weeks before their application was processed—due to claims backlogs—or if the individual claimed benefits retroactively in the PUA program.[351] Thus, by using claims counts to represent the number of people, individuals who submitted multiple claims are counted more than once in DOL’s estimate, which has been prevalent during the pandemic. For example, according to a news release by the California Employment Development Department, as of September 16, 2020, the state had a backlog of nearly 600,000 individuals who had applied for UI benefits and whose applications had not been processed for more than 21 days.

The reliability of DOL’s weekly reporting of claims data is also affected by inconsistent state reporting of PUA data, which has resulted in flawed week-to-week comparisons of total claims numbers. From April through October, different numbers of states reported PUA data in many weeks. For example, states started reporting PUA claims data at different times, depending on how quickly they were able to implement the new program and establish reporting processes. In addition, even after implementing the program, in certain weeks some states did not report data to DOL to include in its weekly news releases.

The inconsistency in the group of states reporting each week undermines meaningful comparisons over time and may have led DOL to inaccurately characterize changes in claims numbers in their weekly UI news releases. For example, in its July 23, 2020, publication, DOL reported that the number of continued claims in all programs for the week ending July 4 decreased by about 200,000 from the previous week. However, Arizona did not report PUA data for that week, after reporting almost 2.3 million claims the previous week. Had Arizona submitted data, DOL likely would have reported a significant increase in claims from the prior week instead of a decrease. Arizona stopped reporting data that week due to suspected fraud in the PUA program, according to DOL officials.

Potential fraud in the UI system, and particularly in the PUA program, according to DOL, further complicates counts, as some states’ claims numbers may be inflated due to fraudulent claims, while others’ numbers may not be. For example, Maine canceled almost 24,000 initial claims and 41,000 continued claims between late May and late June that it determined to be fraudulent, according to a state labor department news release.

Backlogs in states’ claims processing and the ability to claim benefits retroactively have resulted in individuals claiming multiple weeks of benefits in single reporting periods. Multi-week claims are especially prevalent in the PUA program because individuals accumulated weeks of unemployment as states implemented the new program. PUA continued claims make up a large part of DOL’s reported total number of people claiming benefits. However, analyzing data for 20 selected states, we found that the number of continued claims submitted in the PUA program through June 27, 2020, exceeded by almost 20 million the cumulative number of individuals who had submitted an initial claim since the program began (see figure).[352]

Over-reporting of Individuals Claiming Pandemic Unemployment Assistance (PUA)

Notes: We selected the 20 states included in the figure because they had started to report PUA initial claims to DOL within 1 week of the implementation date they reported to DOL, and because of data reliability considerations. The differences shown are illustrative examples and represent how much higher the reported count of continued claims in a given week was than the cumulative count of initial claims through that week. The cumulative count of initial claims represents an upper bound estimate of the number of individuals who could submit a continued claim in any period. The actual number of individuals would be lower than this estimate because some initial claims are denied during eligibility reviews and for other reasons, and some individuals exit the PUA program each week due to obtaining employment or for other reasons. Because initial claim denials and program exits occur each week, an estimate of cumulative initial claims that does not account for these reductions is less accurate the more weeks it includes—i.e., the estimated count is increasingly higher than reality each week, thus underestimating the difference with the number of continued claims. For that reason, our analysis only runs through the week ending June 27, 2020.

Similarly, in California—where claimants generally certify for 2 weeks of benefits at a time—analysis by the California Policy Lab suggests that the number of continued claims in the state consistently exceeded twice the number of individuals submitting those claims. For example, during the week ending August 8, 2020, the California Policy Lab found that about 2.2 million individuals submitted about 6.3 million continued claims—almost 2 million greater than the 4.4 million that might be expected based on the number of claimants.[353] The excess claims likely reflect retroactive weeks claimed and demonstrate how counts of continued claims can cause over-reporting of the number of individuals claiming benefits. In this case, most of this over-reporting occurred in the PUA program. According to the California Policy Lab, PUA claimants, on average, filed claims for about 4 to 9 weeks of unemployment each week from early May through late August. Over the same period, regular UI claimants, on average, filed for slightly more than 2 weeks of benefits each week.[354]

To understand the supportive role UI and PUA benefits are playing in the economy during the pandemic, reliable data are needed on both the number of new claimants each week and the number of continuing claimants who are relying on program benefits. Federal standards for internal control state that management should process data into quality information that is complete, accurate, and readily available to the intended audience when needed. DOL has continued to collect and report claims data in the ways it has historically, which provides some valuable information about the volume of claims submitted. However, because of the atypical unemployment environment during the pandemic, the use of these traditional methods has resulted in the inaccurate reporting of information about the number of individuals receiving benefits. States already collect information to identify and pay unique individuals claiming UI benefits, and could use this information to provide DOL with an accurate weekly count of individuals submitting initial and continued claims, along with the number of claims submitted.

Without an accurate accounting of the number of individuals who are relying on UI and PUA benefits in as close to real-time as possible, policy makers may be challenged to respond to the crisis at hand. In addition, with the looming expiration of the PUA program in December 2020, policy makers may need better information about how many individuals face a loss of benefits and what segments of the population and the economy may be most affected.

Average weekly regular UI and PUA benefits vary by state, and the majority of states have been paying PUA claimants the minimum allowable benefit instead of the amount they are eligible for based on prior earnings. The average regular UI benefits paid by states in September ranged from about $181 to about $466 per week, with the median state paying an average of $295 per week. Among the 41 states reporting PUA data for September, average benefits paid ranged from about $114 to about $357 per week.[355] However, the average weekly PUA benefits reported by a majority of these states were close to their minimum benefit amounts, as set by DOL guidance.[356]

Specifically, 27 of the 41 states reported average weekly PUA benefits paid that were within 25 percent of the state’s minimum PUA benefit amount; 10 of these states reported average benefits within 10 percent of the minimum. This suggests that many individuals in these states are receiving the minimum benefit—because the average is close to the minimum. For example, in Maine, the PUA minimum benefit amount is $172 per week and the state reported average benefits paid in September of about $194 per week.[357] According to a July 2020 Maine Department of Labor news release, in order to expedite payments, individuals initially received the minimum PUA benefits, and the state planned to update benefit amounts based on tax information, starting at the end of July. If a new benefit amount was determined, individuals would receive retroactive benefits payments for all weeks previously paid.

DOL officials told us that to facilitate implementation of the new program most states decided to initially pay PUA claimants the minimum allowable benefit, rather than calculate benefit amounts based on claimants’ documentation of their prior earnings. States have previously used this approach to pay benefits more expediently under the Disaster Unemployment Assistance (DUA) program, according to DOL officials. DOL guidance notes that when individuals submit sufficient documentation of wages, states must immediately recalculate their weekly benefits.[358] States should pay the difference between the amount previously paid and the amount owed for all weeks of unemployment that an individual files during the Pandemic Assistance Period. Based on DUA regulations, states must pay the full PUA benefit amount with the greatest promptness that is administratively feasible.[359] DOL officials said they did not know how many states have begun recalculating individuals’ benefits and making these payments. According to California’s website, the state initially paid claimants the minimum PUA benefit and, as of October 30, 2020, was recalculating benefit payments based on individuals’ total earnings in 2019. The difference in benefit amounts will be back-paid to claimants, according to the state website.

The expiration of supplemental payments for UI claimants may mean that some households’ income no longer exceeds poverty guidelines. Claimants’ households vary in size and may have multiple earners. In addition, the UI system is intended to be a temporary safety net for unemployed individuals. In September, not including supplemental payments, the average weekly regular UI benefits paid in 13 states and the average weekly PUA benefits paid in 29 of the 41 states reporting data were lower than the approximately $245 per week needed to remain above the 2020 poverty guidelines for a 1-person household (annual income of $12,760).[360] Supplemental payments issued under FPUC and LWA through early September, at the latest, exceeded the weekly amount needed for a 1-person household to remain above the 2020 poverty guidelines. However, those supplemental benefits have ended. In addition, with the scheduled expiration of certain CARES Act benefits in December 2020, PUA claimants who remain unemployed may face additional hardship.

For weeks of unemployment starting in late March through the end of July, eligible claimants received an additional $600 weekly benefit under FPUC. After FPUC expired at the end of July, eligible claimants in most states could receive an additional $300 or $400 per week in supplemental payments as LWA. As of November 9, 2020, 49 states, the District of Columbia, and four territories were approved for funding to provide LWA, with grants totaling $42.8 billion of $44 billion available, according to FEMA.[361] FEMA approved states and territories to pay at most 6 weeks of benefits, retroactively, beginning with claims filed for the week ending August 1, 2020, and continuing through the week ending September 5.

An increasing number of states are taking out federal loans to pay UI benefits. As the number of regu